Last week I drove by a new ethanol plant under construction. It was one of 3 new plants being built in our state in the next few years. It is nice to see new jobs getting created in the Midwest.
E85 will be adopted rather quickly as oil prices continue to rise. When you look at the adoption rate/process E85 fits the bill. It is compatible, not complex, easy to try if you have a car that is FFV and the results are observable. Right now innovators and early adopters are trying the product.
Some have argued that ethanol is energy negative. No, recent studies have shown that ethanol is not energy negative.
As many people have pointed out, ethanol does not allow you to travel as far on a gallon as gasoline. In the future, car makers will be able to use smaller more fuel efficient engines that take advantage of the higher octane.
I live in the Midwest. We are oh so happy, here in Ohio, to be still in a state of recovery from the recession (we are still puttering along with our manufacturing and auto industries and other economic woes.)
Ethanol is, from all I can determine, NOT going to be helpful, other than in the arificial short term and perhaps far far in the future.
How is oil, per se, subsidized? Please explain.
Ethanol and the approach that seems to be the one that has been taken will offer much lower miles per gallon and even with subsidies not economic incentive for us to want to use it and no other proven incentives (pollution?) either.
It is King Corn getting a government teat.
The people are not being helped by this anymore than that infamous bridge to nowhere is helping.
We cannot subsidize our way to energy independence, especially when the solution is far more expensive than continuing to use our own vast resources.
Despite this, I say, let's keep trying to develop alternatives, but also let's really develop the largest oil reserves (triple the Saudi's) on the planet Earth rather than try to turn our food into fuel.
The unintended consequences will catch up with us within a decade or two if we don't move forward without these onerous subsidies and mandates.
People will NOT buy FFV's and, upon discovering the high cost and difficulty of fueling them with E85, go merrily on supporting Ethanol and subsidies, unless Ethanol is able to be offered at a huge price advantage over gasoline.
The evidence, thus far, says ethanol is a synonym for false promises. :surprise:
Just about everything gets a subsidy. Oil is no exception. Why are we subsidizing oil exploration when oil companies are making record profits?
Please explain how a business expense being written off is a subsidy. I do agree with them on wasted subsidies on corn ethanol.
However, the huge ethanol subsidies given out year after year have benefited few besides corn growers and ethanol producers, who are often just different units of the same large company. Despite the lobbyists' claims, ethanol has neither reduced dependence on foreign oil nor significantly helped to reduce pollution. Taxpayers' repeated payments in the form of subsidies to corn growers, ethanol producers, and opportunity cost serve no other purpose than to artifically prop up the corn and ethanol industry
As far as the study by the National Corn Growers Association (NCGA) would you expect them to tell us that corn ethanol is energy negative? Find a legitimate study by some one that does not have their fingers in the till. Or in this case the still.
I think the answer to your question is combustion efficiency - something that can and has been done recently with several gasoline engines. Nowadays, we have several engines that produce well in excess on a hp/cubic inch, something unheard of, even 15 years ago. And have improved fuel economies despite rather prodigous power increases. Done thru multiple continuously variable cams, multiple pressurized fuel injectors, other means of improving 'breathing', and, of course, computers to adjust everything. Ethanol doesn't cost hp but simply requires more, in volume, to produce that power (given that the engines are FFV as opposed to ethanol specific). Given the seemingly insurmountable problems in creating an infrastructure for ethanol distribution, it would seem easy to create an engine that might cut significantly into that 30% economy difference by simply improving combustion efficiencies (much like has been done with some recent dino fuel engines). Logically, though, why would any mfgr. try to sell (or develop) something like an 'ethanol' engine for a fuel that doesn't even exist in most parts of the country.
Kind of like keeping the horse in front of the cart!
What is on the horizon that will make the import duty go away? And are you confident that would increase supply?
How would the dropping of the $.51 per gallon incentive help supply?
Won't the price and mpg equation have to get into balance with gasoline before folks would willingly use E85 knowing they would have to stop every 400 miles vs every 600 miles on a car that had a 20 gallon tank and could muster 30mpg's with gasoline?
To make me stop that often, I would need a really cheaper price per gal (say at least 10% cheaper.)
If the $1.50 subsidy/import duty goes away E85 availablity will spread really quickly.
I assume you mean that if there were no market restrictions or subsidies we could get an endless supply of ethanol from other countries. Of course that would kill the ethanol industry in the USA. That is the only reason for the ethanol subsidies is to satisfy the midwest political machine. If the studies are correct, sugar cane produces 7 times the ethanol that an equal value of corn can produce.
It would help the supply by making the US market more attractive for potential importers because their product would be cheaper due to the lack of a tarrif. That does not mean that the demand would increase by much.
Won't the price and mpg equation have to get into balance with gasoline before folks would willingly use E85 knowing they would have to stop every 400 miles vs every 600 miles on a car that had a 20 gallon tank and could muster 30mpg's with gasoline?
People would have to perceive that they get better cost per mileage with E85 to start using it widely.
As for frequency of fill ups to many that may not matter as some people fill up at regular intervals regardless of the gas gauge. I for one fill up every saturday regardless of how full my tank is. of course usually it is getting close to empty for the week and E85 most likely would get me through the week. But I also fill the wifes daily drive each saturday and it rarely has less than half a tank, for that E85 would make it to the weekly fill up.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
you had better check the difference (about 40%) between the 'gross HP ratings' back in those days and the 'net' ratings today. Those treasured 427/425 hp, 426H/425 etc. really about 260-280 hp (as from the factories)- which is why, things like 265hp Maximas, 258hp TLs, 268 hp Camrys etc etc will outrun many of those 'musclecars' of yesteryear. Look it up, the few cars of those days that would still take measure of today's cars, limited production models with oversized carbs, tall rear ends and so on. A 'standard' 383 RR vs. a Maxima, for example; the Nissan in a walk! Performance engines of that era - not close to a REAL HP/CI.
I've suggested we at least consider what would happen to all the happy and unhappy talk about E85 were the "oil fairy" to wave a magic wand and "poof" our supply of oil would increase (hence its upward price pressure would decrease.)
We've talked about E85 in response to higher (but not as high as during the shortages during the '80's) pump prices most acutely and noticeably post-Katrina and geo-political this, that and the other thing.
We have argued, contradicted and discussed at length the merits of E85 (and the de-merits) so to speak. We may have even reached a point where we either largely agree or, for some, agree to disagree.
There are some facts that have not been disputed as far as I can tell by a careful review of many of the postings here:
E85 in an FFV vehicle gets substantially lower MPG's than gasoline or even E10
E85, thus far, is not substantially lower in price per gallon than gasoline
E85 has both a supply and demand problem at present -- and we have presented our cases in great and eloquent detail for some time now.
We seem, however, to agree on but ONE thing -- we were hoping Ethanol (and other alternatives to "gasoline") would buy us time to wean ourselves from Dino Sourced Fuel.
We seem, also, to at least concede we have a limited supply of petroleum on the planet -- even if we differ as to "how long" we have before we literally run out.
Several of us have asked the apparently rhetorical question "would we even be having this discussion if the pump prices would drop and we were actually able to read stories about "ample supplies" on the low end to an absolute "glut" on the high end?"
The responses are varied, but somewhat of a theme seems to have emerged, and that appears to me to be: If we saw the price of a bbl of oil drop by $10 or $20 or even more, we believe E85 would be hard pressed at almost ANY realistic price to compete with dino-fuel (E0 up to E10.)
The great hand of Adam Smith would probably do GM and others a favor and cause them to be able to sell (and offer) even more and bigger SUV's to a market that seems to think a Chevy Tahoe is finally not too small, now that is has a third row rear seat (even if it only gets used 3 times annually when the grandparents are in town.)
I, for one, have been a proponent of plowing some money (more money, perhaps even OUR money -- perhaps) into the vast resources we know exist (800+ trillion bbls) right here in the Western US.
I, among several (many?), have been mad as hell and not willing to take it any more -- about the $.51/gallon subsidy, i.e. Further, I have been mad as hell about the paucity of information about the MPG that the FFV will attain when using E85 vs gasoline.
Bygones.
Anyway, here is what I found to further bolster the notion -- the notion of a soon to come "oil glut" -- (and one would imagine, drop, substantial drop, in pump prices.)
Dateline 4 July 2006:
"Moody’s foresees rapid supply growth continuing to exceed that enjoyed by demand over the next couple of years.
Indeed, supply growth should accelerate in 2007 and 2008, as we increasingly start to see the fruits from the previous [2005 forward] price rally begin to feed through into heightened capacity growth.
Moody’s foresees crude oil prices slipping gradually over the next couple of years, falling below US $50 toward the end of 2007, as our forecast for more market surpluses increasingly filter through. Such a forecast, however, does not fully account for the possibility of further outbreaks of heightened geopolitical uncertainty. If, for example, the U.S. was to tire of Iran's nuclear energy programme and decided to invade, oil prices would skyrocket. However, we have focussed [here, today] on our base case scenario, and saved talk of geopolitical crisis for another time.
For now, we return to Moody’s underlying forecast of further oil surpluses, and no great escalation in geopolitical uncertainty, taking oil back below US $50 by late 2007, and falling into the low US $40s by the summer of 2008. Crude oil prices are forecast to fall, as the global market increasingly realises that the recent past was not in fact undersupplied."
The full text of the article and charts and graphs and stuff are here:
My apologies to the Magical Oil Fairy, and I'll avert my eyes just in case, too.
You bet you're going to apologize. I'm not going to start paying $5 per gallon for fuel just because you decided to upset Her. Grab those rosaries and head for the confessional, stat.
Not sure why you think it is not helpful. Keep in mind that oil supply and demand are very close today. "The margin between global supply and demand narrowed in June, with both around 85 million b/d, according to preliminary data estimated by Oil Market Intelligence,..." energyintel.com
What would we do without ethanol fuel? Demand would obviously exceed supply and cost for fuel would be even higher.
"People will NOT buy FFV's..."
Several million people own FFVs so your statement is incorrect.
King Corn, is that like King Coal, maybe they are brothers.
"How is oil, per se, subsidized? Please explain." Almost all industry is "helped" by government. That is the nature of the beast.
"The evidence, thus far, says ethanol is a synonym for false promises."
The opposite is true. Ethanol is one of the great success stories. I would suggest you read "Homegrown for the Homeland" from RFA.
As global oil demand grows, ethanol and E85 will play a bigger part. The easy oil has been found. From now on it will cost more and more to produce. E85 may end up only supplying 20% of our needs. Still, that 20% will be very important.
I would define a subsidy as help by the government. It can come in many forms. Why do you only agree with the wasted subsidies on corn ethanol? It sounds like you are being selective.
The statement "ethanol has neither reduced dependence on foreign oil..." Is true if you consider that US production of oil has decreased faster than can be replaced by ethanol. We will be dependent on foreign oil for a long time, unless somebody decides to invade Canada, in which case.......
"As far as the study by the National Corn Growers Association (NCGA) would you expect them to tell us that corn ethanol is energy negative?"
Yes, I would. Why would they lie to their members?
Oil supply and demand are tracking and tight? -- apparently Moody's is unaware that supply is tight: ". . .Moody’s underlying forecast of further oil surpluses, and no great escalation in geopolitical uncertainty, taking oil back below US $50 by late 2007, and falling into the low US $40s by the summer of 2008. Crude oil prices are forecast to fall, as the global market increasingly realises that the recent past was not in fact undersupplied." 4 July 2006 economy.com.
Ethanol fuel (speaking of E85) is not making a dent in our use of oil from a practical standpoint. Three "popular" sources (at least) of this information have been cited and recited in this thread for weeks.
The requirements in terms of the percentage of our farm land (if based on corn) to make E85 in any significant numbers literally mean "taking food out of our mouths" -- effectively transferring the costs. Corn exports would be cut and if taken to the extreme stopped altogether were we to attempt to make the amount of ethanol we need to make the dent we need (71% of our availble farm land would be required -- according to Popular Mechanics, also cited in this thread for months.)
The percentage of people (not companies, not government, not fleets, etc) using FFV's is small, despite the numbers that are quoted (6 million) as having been sold) using FFV's is still quite small. Further with the limited distribution of E85 it has been suggested that the E85 vehicles (FFV's) may find themselves unable to locate E85 and hence run regularly on gasoline (perhaps E10.)
The notion of widespread adoption of FFV's by individuals and families is difficult to support when the costs and inconvenience posed are factored in.
For E85 to catch on, it has to cost less than E0 -- and this must also take into consideration the approximate 30% hit on MPG's an FFV takes when using E85 vs E0 or E10 (technically a gallon of E10 will go about 97% as far as a gallon of E0, but a gallon of E85 will travel about 70% as far as E0, etc.) At three dollars per gallon for gasoline, E85 would need to be about a buck less per gallon just to be "even" with the cost of gasoline.
If the $.51 per gallon "incentive" (from the public trough) is suspended, the price of a gallon of E85 would have to drop, effectively by $1.41 to break even with the cost of a $3.00 gallon of gasoline.
Most folks once they "do the math" will, see the economic disincentive that accompanies ethanol (at present.)
As the price of fuel rises, there has been, thus far, a rise in the price of diesel (of all sources), gasoline (of all sources) and of ethanol (which is mostly corn sourced at this point in time.) It is difficult to imagine the cost of one fuel will be immune from the vicissitudes of the market.
With clean diesel mandated and blutech technology already to go (and with the energy act of 2005 offering tax credits to those who elect diesel), some experts predict diesel adoption could grow from sub 1% to nearly 20% more rapidly than E85 production AND distribution can be brought on line.
Time and again, Big Oil has had its downs and ups. It is taxed liked there's no tomorrow and when oil companies have tough times, we have not historically rushed to support Big Oil from the public trough. Ethanol is a non-starter, or apparently is thought would be, without the $.51 per gallon "help" from our pockets. We also are trying to protect King Corn from Brazilian sugar ethanol with legal rather than free-market economic barriers.
More and more sources of oil have been located and as each year passes this new oil becomes more and more economical to extract.
ICE technology continues to provide ever cleaner and more efficient motive force for our cars and trucks. It seems that we continue to have mini-ICE-breakthroughs on a regular basis with no reason to believe the end of theses improvements is anywhere near.
E85 in the face of ample oil will remain a very minor player, it will play a smaller part, in fact. Yet, with the mandates provided in the energy act of 2005, valiant efforts, investments and publicly funded incentives, E85 may "burn brightly" for a brief period -- it is limited currently by cost, price, distribution, low MPG's in FFV's, little, if any, greenhouse gas amelioration and so on.
As global oil demand grows, we will tap into our vast resources in Colorado, Wyoming, etc, offshore, ANWR and on and on.
Meanwhile we will, hopefully, work on alternatives (including renewables, such as ethanol and bio-this and bio-that) that may include synthesizing liquid fuels from coal and soybeans and seawater for all we know.
Ethanol based on most of the postings here and thousands of other secondary sources (since most of us have not tested and verified the claims of costs, distribution, pollution and economics) is full of false promises. If taking my tax dollars and propping up an undertaking defines success, well, maybe, just maybe, there is some slight success.
As global oil demand grows, we will open the spigots wider and wider and as the price at the pump falls, folks will be hard pressed to choose E85 unless something changes the economics and performance capabilities of FFV's and E85 to make it the clear choice.
People, most people to be accurate, will act out of either fear or greed (to be blunt) -- E85 and FFV's, appear to not be able to appeal to altruism as the economic disincentive is almost as high as the lack of availability of the product itself.
The only way E85 will supply 20% of our needs if it is forced to do so via mandate.
Prohibition didn't work either.
As unlikely as even I believe it to be, the economic and technical argument favors diesel usage at 20% more strongly.
And remember, at 30% diesel penetration we cut our need for foreign oil by 1.4bbl per day, coincidentally the amount we import from Saudi Arabia every single day. And were that to come true, our cars will go further and quicker on every gallon (20% further than gasoline which effectively means 50% further than E85 at a cost which appears would remain about the same as mid-grade gasoline.)
I conclude with one question, what do the oil companies get from the public trough, help in building new refineries? Pull the other one. :surprise:
Engineers were able to increase Hp in the Saab Bio 9-5 by 20%. If you increased a 160 hp base Fusion engine by 20% (190 hp) you would be close to the V6 power output. The E85 mileage would probably be close to the V6 mileage. In other words, you would have the option of getting good economy when running regular gas and more power when running E85.
I would not consider creating an infrastructure for ethanol distribution to be insurmountable. If oil companies can move oil sand or drill in thousands of feet of water creating a distribution system for ethanol is doable.
"Logically, though, why would any mfgr. try to sell (or develop) something like an 'ethanol' engine for a fuel that doesn't even exist in most parts of the country."
Actually, the answer is simple. If Ford, GM and DC want to push the industry along they would build the cars and let the customers create the demand. In marketing, sometimes you put the cart before the horse. I just hope their latest announcements about producing more FFVs are less blah, blah, blah... and more action.
Yes, I would. Why would they lie to their members?
Because if the public was convinced as I am that corn ethanol is a negative energy product they would get no public support. I realize that Congress basically respond to lobbyist and the size of their checkbook. The Corn Lobby is a BIG one with a big check book. Just like the oil lobby is big. If you read all the studies, as I have read many of them. Corn ethanol is not very sound. Not to mention the damage the corn growers are doing to the environment.
There is a difference between a subsidy and a tax writeoff. All businesses get to writeoff expenses incurred in the process of doing business. That is what the oil companies do. I did not here a public outcry when oil dropped to $9 a barrel in 1998. The oil companies in Alaska were not making any money, Or very little. I see the profit margin for Microsoft and no one suggests tacking an excess profit tax on to them.
If growing corn and making ethanol is a legitimate source of alternative energy it does not need a buck and a half a gallon subsidy to be produced. It does not need the protectionism of a 54 cent per gallon tariff on outside ethanol coming in from Brazil. We don't tack extra tariffs on oil coming from Canada or Mexico to protect our oil interests. That would be an extra $22.68 per barrel added to foreign oil coming into the US.
The American public are getting screwed by the likes of ADM on ethanol. It has raised the price of gas to comply with the flaky mandate.
Take off the subsidies, tariffs and mandates. Let's see if it is a legitimate alternative fuel source. Let ADM and Verasun writeoff the building of the ethanol plants instead of you and I paying 90% of the cost to build them. I can tell you that not one more ethanol plant would be built. Because ADM knows it is a loser without being paid for by tax dollars. Corn ethanol is NOT a legitimate business venture in any way shape of form.
It is a way to make money and that does, for the time being, mean it is a business. It is also illegitimate, as you suggest, since to make that money it requires subsidies and the public dole.
It is a legalized scam based on the preponderance of evidence.
False promises to shareholders are bad enough, but false promises to the American People -- oh, yea, I forgot, have too often been par for the course.
I would define a subsidy as help by the government. It can come in many forms. Why do you only agree with the wasted subsidies on corn ethanol? It sounds like you are being selective.
OK, when the oil pipeline in Alaska came on line in 1977 oil was about $35 per barrel. Of that $6 per barrel went to the state of Alaska and about $6 per barrel went to the Federal government. At that time 85% of the state of Alaska revenue came from oil. Not sure what that is today. Still over 60%. My question to you. How much money are the states getting on every gallon of Ethanol and how much is the Federal government getting? My guess is NOTHING. How much money will go into the coffers of the political candidates that vote for the Ethanol subsidies? My guess is a Bunch. Ethanol is a loser on so many levels it is hard to fathom it being produced.
But it is worse than just a loser (at this point) for it also "sucks" public money to the tune of $.51 per gallon.
The breakdown for E0 (and as far as I know E10) is such that a significant portion of the price per gallon is paid to government as taxes.
With Ethanol (E85) the government is giving back to subsidize "E" -- at this point, it is not only a loser for itself it is a loser for the taxpayer.
Oddly, by mandating "E" the energy act of 2005 has created a business model where without the subsidy and laws mandating our use of 2.87% E, etc etc etc, there would be no incentive (free market wise) to invest.
I hope the government wants to subsidize this cool idea I have for buggy whips, yea, that's the ticket, I need a $5.00 per whip subsidy to make a go of it!
Not sure why you think it is not helpful. Keep in mind that oil supply and demand are very close today.
In an open market supply and demand will always be very close.
Several million people own FFVs so your statement is incorrect.
Owning a FFV and using E85 are two different animals. Most people who own a FFV will not use E85 simple because 1.) it costs more to drive on a per mile basis and 2.) it is very hard to get.
The opposite is true. Ethanol is one of the great success stories.
Yep you see gas stations all over selling E85, oh wait thats not true is it.
Oh ok there are millions of cars using E85, oh wait thats not true either.
So how its ethanol a success story when it is looking more and more a failure?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
It was a failure 75 years ago and will be a failure again. We have been subsidizing loser "Corn Ethanol" for the last 28 years. It started as a 40 cent subsidy in 1978.
1930's Fuel ethanol gained a market in the Midwest. Over 2,000 gasoline stations in the Midwest sold gasohol, which was gasoline blended with between 6% and 12% ethanol.
1983 The Surface Transportation Assistance Act increased the ethanol subsidy to 50 cents per gallon.
1984 The number of ethanol plants in the U.S. peaked at 163. The Tax Reform Act increased the ethanol subsidy to 60 cents per gallon.
1985 Many ethanol producers went out of business, despite the subsidies.
Only 74 of the 163 commercial ethanol plants (45%) remained operating by the end of 1985, producing 595 million gallons of ethanol for the year. One reason for producers going out of business was the very low price producers could receive for their ethanol (even with a subsidy of 60 cents per gallon), since the prices of crude oil and gasoline were so low. Despite the very low price of corn, which is the main driver of the cost of producing ethanol, nothing was enough to prevent the high rate of market change.
Who guaranteed the loans to build those ethanol plants in the 1980s? You guessed it our Congress spending our money like a drunk sailor.
These subsidies for loser "Corn Ethanol" have been around a while. It gets better:
1992 The Energy Policy Act of 1992 (EPACT) provided for two additional gasoline blends (7.7% and 5.7% ethanol). EPACT also defined ethanol blends with at least 85% ethanol as “alternative transportation fuels.” It also required specified car fleets to begin purchasing alternative fuel vehicles, such as vehicles capable of operating on E-85 (a blend of 85% ethanol and 15% gasoline). The EPACT also provided tax deductions for purchasing (or converting) a vehicle to that could use an alternative fuel such as E-85 and for installing equipment to dispense alternative fuels. The Clean Air Act Amendments mandated the winter-time use of oxygenated fuels in 39 major carbon monoxide non attainment areas (areas where EPA emissions standards for carbon mioxide had not been met) and required year-round use of oxygenates in 9 severe ozone non attainment areas in 1995.
1997 Major U.S. auto manufacturers began mass production of flexible-fueled vehicle models capable of operating on E-85, gasoline, or both. Depsite their ability to use E-85, most of these vehicles used gasoline as their only fuel because of the scarcity of E-85 stations.
1998 The ethanol subsidy is extended through 2007 but will be gradually reduced. The ethanol subsidy of 54 cents per gallon will be reduced gradually to 51 cents per gallon in 2005.
So we pay and pay as the saga continues. We have been victims of the corn ethanol lobby for a long time and it only gets worse.
2002 U.S. automakers continued to produce large numbers of E-85-capable vehicles to meet federal regulations that require a certain percentage of fleet vehicles to be capable of running on alternative fuels. Over 3 million of these vehicles were in use. At the same time, several States were encouraging fueling stations to sell E-85. With only 169 stations in the U.S. selling E-85, most E-85 capable vehicles are still operating on gasoline instead of E-85.
2003 A 1998 law reduced the ethanol subsidy to 52 cents per gallon starting January 1, 2003.
As of October 2003, a total of 18 States had passed legislation that will ban MTBE - but none of the states that are major users of MTBE, such as CA, CT, KY, MO and NY have their ban in effect yet. California began switching from MTBE to ethanol to make reformulated gasoline, resulting in a significant increase in ethanol demand by mid-year, even though the California MTBE ban does not go into effect until January 1, 2004.
New York and Connecticut are planning for increased ethanol use in late 2003 because MTBE bans in their states will also take effect on January 1, 2004.
So as our tax dollars get swallowed up by the Corn states our gas prices increase to satisfy a mandate that is totally bogus. Modern engines compensate via the O2 sensor. Oxygenated fuel is not needed at all, Period.
All data from the DOE: This is for the pro ethanol readers, that think this is such a great new alternative fuel.
This is good info and if the cost were to be equal, we can hope that altruism or guilt or something would motivate consumers at the retail level to at least STRONGLY consider using E85.
I cannot prove this, since it is not possible to really have much of a test of this, but -- it still seems that for E85 to be sought or even selected if it were to be as easy to locate as "gasoline," it must not be the same cost, it must be lower, even if only slightly lower.
Your numbers, approximate my guesstimated numbers based on amount of distance per gallon one can go in an FFV using E85 or gasoline (E85 goes about 70% as far, meaning that if gas is $3.00, E85 would have to be ~ $2.10 to be even with gas in terms of energy cost.) Of course my calculations place no value in dollars on the cost of needing to go to the fueling station more frequently.
If I drive 500 miles per week and my gas FFV will go 600 miles on a tank, I would need a fill up once per week; conversely, my E85 FFV would only go some 400+ miles per tankful and I would need to stop more frequently (6 times for every 4, E85 vs gasoline, i.e.)
If one places some $ value on the time it takes to stop for gas, 4 times vs 6 for the same distance traveled, well then the price of E85 needs to drop further still, etc.
Now, I am not sure what the $.54 tariff you are referring to is for/from -- I have been using, instead, the $.51 per gallon subsidy that artificially lowers the price of a gallon of E85.
Therefore, IF the price of gasoline is $3.00/gal and the current pump price of E85 is $2.60, the non subsidized price would be +$.51, or $3.11. We can therefore determine with some fuzzy logic what the price per gallon of E85 would need to be to motivate someone to use it in his/her FFV ("guilt factor" included or excluded as you deem appropriate.)
Make all these same calculations using a modern diesel as is offered all over Europe and elsewhere, and based on economics first and "performance lust" second, diesel would pretty much destroy E85's chances in the market.
Of course this is very unlikely to happen without a whole bunch of choice of diesel models in cars costing UNDER $40,000 -- and we will see the first wave of Euro diesels within the next 12 - 18 months, but most of them (VW excluded) will be well over $40K, meaning market penetration will likely only pick up a very small amount.
E85 70% MPG with an effective price per gallon disadvantage TODAY (vs gasoline.)
Diesel 120% MPG with an effective price per gallon advantage TODAY (vs both ethanol -- and how -- and gasoline.)
The next two years, for starters, could be very interesting. Even our somewhat financially strapped state, however, is coughing up big bucks to aid in the creation of distilleries, er, refineries for ethanol -- they drank the kool-aid apparently. Or the dole from the public purse "made them do it." Or both.
If Ford, GM and DC want to push the industry along they would build the cars and let the customers create the demand. And this also would be one the the problems - when was the last time that the 'Detroit 3' 'pushed' the industry. Innovation of any kind - look to the Japanese and the Europeans and they seem to be 'pushing' hybrids and diesels, respectively. Own an 05 Avalon that is blessed with a V6 that is near revolutionary in terms of the power it makes relative to the near 30 mpg it gets - an engine Toyota and Lexus are using throughout, and something that could never have been 'pushed' to market by Detroit - they simply do not have the money to do these kind of things.
If Nissan (or Toyota) is dumb enough to buy GM, then maybe, but not until either of those buyers can figure out a way to get out of GMs labor obligations and whatever political problems all the layoffs would create. A major player needs to champion E85 if it is going to have a chance, and that would exclude GM, Ford, and possibly even DC.
Now, I am not sure what the $.54 tariff you are referring to is for/from
This is a tarriff on ethanol imports. Other countries, Brazil in particular, could export ethanol to us if this was gone.
the $.51 per gallon subsidy that artificially lowers the price of a gallon of E85
Except right now most of that subsidy is going to the owners of the ethanol plants, not being used to lower the price.
If one places some $ value..... then the price of E85 needs to drop further still, etc
I agree with you: how much less does it need to be? If E85 was $0.05/gallon less (in real terms, adjusted for energy content) would people switch? Would it need to be $0.10/gal?
What has been somewhat useful and very enlightening is the pump price reality checks that are sometimes posted here on the forum.
Sometimes the prices (with the subsidy of $.51/gas firmly in place, don't forget) are the same for gasoline and E85, often E85 is slightly less and sometimes way more (temporary issues have shot the price of a gallon of E85 above the price of gasoline on several occasions since Katrina.)
Right now, there is only disincentive (largely) to use E85 from a money standpoint and a major inconvenience disincentive due to most folks inability to even find an E85 fueling station (we will soon have 10 E85 stations serving the entire state of Ohio -- woo woo!)
A major player needs to champion E85 if it is going to have a chance, and that would exclude GM, Ford, and possibly even DC.
I don't particularly see this as being a problem. There is a minimal cost to the manufacturer for converting a gas-powered car to FFV, and consumers already in the market for a gas car can buy a FFV vehicle without any sacrifice. (In constrast, a switch to diesel is drastic, in that it forces the consumer to actively make a choice that includes a drastic change in fuel purchasing habits.)
Toyota has already announced that it will bring FFV to the US in 2008. I am assuming that other automakers may do the same if ethanol maintains some allure as an alternative or if it gains a price advantage, because it costs the automakers very little to participate and allows them to market themselves as being on the E85-enviro bandwagon.
That doesn't necessarily mean that consumers will start using the fuel, which would take distribution and, I suspect, lower prices to encourage its use. It also doesn't necessarily mean that it would be produced in sufficient quantities so as to make much of a difference.
So on the whole, I don't see getting the vehicles into the hands of the driving public to be particularly difficult. Particularly with mandates or incentives, it would not be a challenge to get every new gas vehicle sold to have FF capability within the next several years.
What has been somewhat useful and very enlightening is the pump price reality checks that are sometimes posted here on the forum.
Biodiesel pump prices are also above those of gas in my market, yet I don't use that as an argument against biodiesel.
We need to accept that current pump prices of alt fuels are not necessarily a reflection of future pump prices. Increased production and distribution can be expected to lower prices, assuming that normal supply-and-demand metrics apply. You don't make decades-long policy decisions based upon what is happening at one specific fuel station today.
Several of the articles written over the past three months about the $.51 subsidy claim that without this subsidy, the E85 pump prices would be AT LEAST that much higher.
I cannot prove this is the case, but it seems to be an accepted notion and a plausible conclusion.
In any case, beats me -- re price -- my guess is that a nickel might not be enough, but that $.10 would probably be a good place to start.
This means, the price would have to be $2.01 when gasoline was $3.00 essentially (based on the MPT -- miles per tankful -- numbers.)
Good luck figuring out how to subtract the $.51 public money from a gallon of E85 and have it sell at about 2/3 the price of a gallon of dino-gas.
The ethanol proponents, perhaps, can help the other side with our conclusions, hopefully.
:confuse:
My pea brain can't make the numbers work favorably.
Good luck figuring out how to subtract the $.51 public money from a gallon of E85 and have it sell at about 2/3 the price of a gallon of dino-gas.
Basic point -- increased production scale should reduce production costs and allow for lower prices.
It's the same principle by which Henry Ford could lower the price of a Model T by two-thirds, simply by building more of them, and how that impetus caused others to follow suit. The idea behind subsidies of this sort is to encourage companies to enter a market. Once they have entered the market, they have enough time and money invested in it to work toward making a profit by expanding sales and increasing distribution. The subsidy should stimulate initial market interest and facilitate entry, and the market should do the rest.
Whether or not this will be true for E85, I don't know, but there really isn't much reason why it shouldn't happen if the usual drivers of the free market apply. Once producers get into the business of production, they should be motivated to turn their infrastructure into cash flow, which means making stuff that they can sell and convincing people to buy it.
I was not even suggesting in any way that we make policy decisions based upon what is happening at one specific fuel station.
However, I do believe there is "interest" in knowing.
Were folks from all over to share "today's" prices, we, at the very least, get a sense of what is happening, since if even 10 or 20 folks shared numbers it would be, right now, not statistically without merit.
Here in Ohio, if I could drive to an E85 pump in my city and post today's prices and a dozen or so other folks would do the same in a wide geography, we would have part of the required number of snapshots when, if shown in succession over time, would give us some indication of "trends."
Perhaps these data would be inadequate to feed the policy decision making machine -- perhaps they would be instrumental.
Most of us have at least a curiosity about such data and whether we use it to develop arguments or support theories will be based on the many factors including anecdotal evidence (both supportive and contradictory.)
From sea to shining sea, I would like to see E85 and E0/E10 pump prices.
socala4 - the original thread had to do with engineering an efficient E85 engine - something that would do something better than the current 30%+ FE penalty. Sure, replacing a few fuel system parts and making some modification to engine control programs is easy - otherwise GM could not have done it. And, I'm thinking that to help E85 become truly viable that engine may have to be E85 specific, as opposed to FFV. Then, of course, you get into the whole cart or the horse discussion.
Biodiesel pump prices are also above those of gas in my market,
Gas prices shot up around here the last few weeks by about 30 cents a gallon. Diesel and biodiesel are now cheaper than regular gas (for the time being). Even if they were more expensive the greater mileage overcomes that.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
No argument whatsoever regarding increased production, and prices, etc.
The steepness of the price drop is, for me, difficult to believe is possible "soon enough" to allow E85 to become viable without the public teat.
I then couple all of these "hard to fathom" events with the somewhat widespread belief that the price of oil is set to fall sufficiently to give ethanol a run for its money -- meaning that ethanol would have to sharply decrease in price AGAIN in the face of what some think could be $50, $40 or even $30/bbl oil.
I do not wish our alternative energy R&D and "success" to be in the past tense. I just believe it will require non-public funding in a free market rather than a subsidized and taxpayer propped up market.
Several of the articles written over the past three months about the $.51 subsidy claim that without this subsidy, the E85 pump prices would be AT LEAST that much higher.
More likely is that the subsidy reduces the cost by less than the subsidy. In other words eliminating the 51 cent subsidy will cause the price to increase less than 51 cents.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Were folks from all over to share "today's" prices, we, at the very least, get a sense of what is happening, since if even 10 or 20 folks shared numbers it would be, right now, not statistically without merit.
If the discussion is about the future of alt fuels, then this fixation on current pump prices is not only almost entirely irrelevant, but it's actually disingenuous.
It should not surprise anyone that alt fuels are currently not cheap, because of the limited production and distribution. This is especially true in the case of ethanol, because the E10 mandate imposed increased demand before the supplies were ready for market, which has put ethanol pump prices out of their likely equilibrium.
Again, that discussion would be the intellectual equivalent of claiming that cars would never be viable because they tended to cost $2000-3000 back around 1910, an enormous sum that put them well out of reach of most of the market. It would a bad argument, because it failed to account for the impact of mass production on the price of the product.
So it's a bad argument, and I wish it would get dropped once and for all. While it is a reasonable argument to show why E85 isn't flying off the shelves today, it doesn't have any bearing on what will happen as supplies are increased.
And again, let us remember that wholesale ethanol prices were well below the price of gasoline prior to the E10 mandate, so you are focusing on a pricing condition that has been with us for only about the past year. It's clearly a short-term outcome, and not necessarily a barometer of what is going to happen in the future.
Basic point -- increased production scale should reduce production costs and allow for lower prices.
Most likely not as it would increase the demand of the raw product (right now corn) and raise that price offsetting any benefit in economies of scale.
It's the same principle by which Henry Ford could lower the price of a Model T by two-thirds, simply by building more of them, and how that impetus caused others to follow suit.
Most of the price reduction of the Model T was due to streamlining the production process (remember you can have it in any color you want as long as its black?).
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
This certainly may be true, for I am not first hand involved in how this actually takes place.
But, even if 2/3 of the subsidy were to be the amount the increase, it only serves to force E85 into an uphill battle since it is currently difficult to make E85 attractive even with the subsidy.
Do you have any info as to how much of the subsidy actually is used to reduce the pump price?
There are avenues to get nationwide E85, E0 and E10 gas prices if you check with the host over at "Fuel System" -> "Report your local gas prices here" and ask him to set up a site for people to list E85 and E10 prices. Alternatively, check with gasbuddy.com and see if they would add the ethanol blends to their list.
Most likely not as it would increase the demand of the raw product (right now corn) and raise that price offsetting any benefit in economies of scale.
That seems unlikely. An increase in commodity prices will stimulate new suppliers to enter the market in their efforts to capitalize on those higher prices. The resulting supply increase then causes prices to decline.
Much of the cost of these alt fuels is going to come from related costs of processing, transport, etc., not from the commodity itself. To the extent that processing costs per unit can decline, there should be competitive pressures for retail prices to fall.
Using the Megatrends premise coupled with the perception that such information when disseminated not just here on these forums but on CNN, FOX, MSNBC and the major broadcast networks becomes able to influence behavior, I would say that although almost statistically without merit (today) it is certainly not irrelevant.
Moreover, the data would hardly be lacking in candor. The data would not necessarily -- on its own merits -- prejudice someone's thinking either.
If I was of a mind that today's gas prices were the bellwether of all things (and gas prices) to come, perhaps, just perhaps, the data would be misleading and possibly specious (but hardly disingenuous.)
None of this is simple -- this conclusion is self-evident based on the number and quality of posts just on this one forum.
Yet, you can almost bet that the daily/nightly news will soon have a "Today at the fuel station" chart detailing the price per unit of gas, gasohol, diesel, bio-diesel, E85 and so on. Trends will be identified via such snippets of information. There may be some inaccuracies in the data, there will be a wide variety of interpretation, but most would be hard pressed to claim it lacked relevance. It will be influential -- somewhat akin to the way "consumer confidence" can effect the stock market and even the Fed's behavior.
Yesterday, when oil hit $75+/bbl (and the prices at the pump here in River City rose to nearly $3.20 with spot prices as high as $3.39), it might be safe to conclude that the future prices will be higher still or that shortages are right around the corner.
There are, however, many voices (on all sides of the "oil issue") that can be found that proclaim "enough is enough" get ready for prices to fall once it is widely understood that our current dilemma is NOT based on shortages (although some still believe this is just a re-run of the situation we endured in the '80's era -- during which time shortages did occur.)
We are not having high prices based on a supply issue -- unless there is collusion on a scale that is unimaginable designed to keep the "truth" from the world that we are running out of oil (or not, depending on your point of view.)
We all "know" that oil is not infinite -- but, even the most pessimistic estimates suggest that no one alive today will see the end of plentiful oil. The optimistic estimates claim plentiful supplies will go on for multiple generations.
The "best" scientists and economists and business execs in the energy business may not agree about every nit, but generally speaking oil will be here for lifetimes to come.
"At what price," is a germane question, don't you think, however?
Over time, for a variety of reasons, the price will rise, of course. The next phase of this progression is predicted by these economist and business types to be double digit price per bbl falls (some claim price declines of over $30 per bbl within 2 - 3 years, others suggest more modest declines of $10 to $20/bbl.) Scientists continue to develop new ways to find, extract and refine oil from several heretofore untapped sources and it will ultimately come about that our public policy shall erode and we will permit extraction from regions previously labled "hands off."
Internal combustion engine engineers working in concert with electrical engineers and other scientific and inventive types continue to make cleaner, more powerful and more efficient ICE power plants.
Even Mr. Gore is somewhat sanguine on the possible outcomes -- that is, even Gore is not doom and gloom entirely (and this is NOT in any way encouraging any kind of political debate, I'm not going there.)
The row E85 will have to hoe will become rockier and harder with even a $10 per gallon drop in the price of a bbl; likewise E85's struggle will increase once we start cooking the oil we already know about in Colorado and Wyoming, not to mention the other sources we already know about that contain vast quantities of dinoleum.
Moreover, as ICE's (both spark and compression) become cleaner and more powerful AND more economical, folks will most certainly gravitate to proven performers and ever more powerful passenger conveyances.
The need for alternatives is not up for debate from what I can tell. We all seem to agree we can't just keep doin' what we're doing without some mid to long term consequences.
But E85 seems set to buy what? Time? Cleaner air? Add substantially more than "filler" to our dwindling gasoline supplies (as if they really were dwindling)?
Thus far we have suggested and in some cases demonstrated that E85's promises show slim to no chances of helping in any of these areas -- and slim is packing his bags for a long trip outta here.
We are not having high prices based on a supply issue -- unless there is collusion on a scale that is unimaginable designed to keep the "truth" from the world that we are running out of oil (or not, depending on your point of view.)
Of course we are. In the case of oil, suppliers are pumping all of the oil that they can, but demand growth has overwhelmed current supplies, and the capacities can't be increased quickly enough. (The supply of oil at this stage is somewhat inelastic.)
In the case of ethanol, we had a change in legislation which mandated an increased level of demand, again more quickly than the supply needed to serve that demand could be increased. If supplies were increased sufficiently (and high prices will encourage new players to enter the market and current players to expand production), prices should decline.
An increase in commodity prices will stimulate new suppliers to enter the market in their efforts to capitalize on those higher prices.
That is if there is room for additional production. However that is not the case for corn, corn production is fastly approaching being maxed out. Soybeans are not much better and we are to far away from switch grass and biomass for them to make a near time effect. Increasing production in ethanol will drive its price up if only in the short term (under 5 years).
To the extent that processing costs per unit can decline, there should be competitive pressures for retail prices to fall.
While processing costs will go down I don't see it being a significant amount especially since it is estimated that processing plants cannot run at a profit without a subsidy. New ones going up will just be white elephants.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Comments
E85 will be adopted rather quickly as oil prices continue to rise. When you look at the adoption rate/process E85 fits the bill. It is compatible, not complex, easy to try if you have a car that is FFV and the results are observable. Right now innovators and early adopters are trying the product.
Some have argued that ethanol is energy negative. No, recent studies have shown that ethanol is not energy negative.
http://www.ncga.com/ethanol/debunking/index.htm
As many people have pointed out, ethanol does not allow you to travel as far on a gallon as gasoline. In the future, car makers will be able to use smaller more fuel efficient engines that take advantage of the higher octane.
http://www.edmunds.com/insideline/do/AutoshowArticles/articleId=108748
Just about everything gets a subsidy. Oil is no exception. Why are we subsidizing oil exploration when oil companies are making record profits?
http://www.taxpayer.net/TCS/fuelsubfact.htm
E85 is here to stay, people should get over it....
Ethanol is, from all I can determine, NOT going to be helpful, other than in the arificial short term and perhaps far far in the future.
How is oil, per se, subsidized? Please explain.
Ethanol and the approach that seems to be the one that has been taken will offer much lower miles per gallon and even with subsidies not economic incentive for us to want to use it and no other proven incentives (pollution?) either.
It is King Corn getting a government teat.
The people are not being helped by this anymore than that infamous bridge to nowhere is helping.
We cannot subsidize our way to energy independence, especially when the solution is far more expensive than continuing to use our own vast resources.
Despite this, I say, let's keep trying to develop alternatives, but also let's really develop the largest oil reserves (triple the Saudi's) on the planet Earth rather than try to turn our food into fuel.
The unintended consequences will catch up with us within a decade or two if we don't move forward without these onerous subsidies and mandates.
People will NOT buy FFV's and, upon discovering the high cost and difficulty of fueling them with E85, go merrily on supporting Ethanol and subsidies, unless Ethanol is able to be offered at a huge price advantage over gasoline.
The evidence, thus far, says ethanol is a synonym for false promises. :surprise:
Please explain how a business expense being written off is a subsidy. I do agree with them on wasted subsidies on corn ethanol.
However, the huge ethanol subsidies given out year after year have benefited few besides corn growers and ethanol producers, who are often just different units of the same large company. Despite the lobbyists' claims, ethanol has neither reduced dependence on foreign oil nor significantly helped to reduce pollution. Taxpayers' repeated payments in the form of subsidies to corn growers, ethanol producers, and opportunity cost serve no other purpose than to artifically prop up the corn and ethanol industry
http://www.taxpayer.net/energy/ethanol.htm
As far as the study by the National Corn Growers Association (NCGA) would you expect them to tell us that corn ethanol is energy negative? Find a legitimate study by some one that does not have their fingers in the till. Or in this case the still.
Ethanol doesn't cost hp but simply requires more, in volume, to produce that power (given that the engines are FFV as opposed to ethanol specific). Given the seemingly insurmountable problems in creating an infrastructure for ethanol distribution, it would seem easy to create an engine that might cut significantly into that 30% economy difference by simply improving combustion efficiencies (much like has been done with some recent dino fuel engines). Logically, though, why would any mfgr. try to sell (or develop) something like an 'ethanol' engine for a fuel that doesn't even exist in most parts of the country.
Kind of like keeping the horse in front of the cart!
If the $1.50 subsidy/import duty goes away E85 availablity will spread really quickly.
We have engines... that produce... excess on a hp/cubic inch, something unheard of, even 15 years ago
Chrysler 300s of the mid 50s, Corvette 327/375 Fuelie, etc...1 HP per c.i. goes back many years, Captain.
How would the dropping of the $.51 per gallon incentive help supply?
Won't the price and mpg equation have to get into balance with gasoline before folks would willingly use E85 knowing they would have to stop every 400 miles vs every 600 miles on a car that had a 20 gallon tank and could muster 30mpg's with gasoline?
To make me stop that often, I would need a really cheaper price per gal (say at least 10% cheaper.)
I assume you mean that if there were no market restrictions or subsidies we could get an endless supply of ethanol from other countries. Of course that would kill the ethanol industry in the USA. That is the only reason for the ethanol subsidies is to satisfy the midwest political machine. If the studies are correct, sugar cane produces 7 times the ethanol that an equal value of corn can produce.
It would help the supply by making the US market more attractive for potential importers because their product would be cheaper due to the lack of a tarrif. That does not mean that the demand would increase by much.
Won't the price and mpg equation have to get into balance with gasoline before folks would willingly use E85 knowing they would have to stop every 400 miles vs every 600 miles on a car that had a 20 gallon tank and could muster 30mpg's with gasoline?
People would have to perceive that they get better cost per mileage with E85 to start using it widely.
As for frequency of fill ups to many that may not matter as some people fill up at regular intervals regardless of the gas gauge. I for one fill up every saturday regardless of how full my tank is. of course usually it is getting close to empty for the week and E85 most likely would get me through the week. But I also fill the wifes daily drive each saturday and it rarely has less than half a tank, for that E85 would make it to the weekly fill up.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
We've talked about E85 in response to higher (but not as high as during the shortages during the '80's) pump prices most acutely and noticeably post-Katrina and geo-political this, that and the other thing.
We have argued, contradicted and discussed at length the merits of E85 (and the de-merits) so to speak. We may have even reached a point where we either largely agree or, for some, agree to disagree.
There are some facts that have not been disputed as far as I can tell by a careful review of many of the postings here:
E85 in an FFV vehicle gets substantially lower MPG's than gasoline or even E10
E85, thus far, is not substantially lower in price per gallon than gasoline
E85 has both a supply and demand problem at present -- and we have presented our cases in great and eloquent detail for some time now.
We seem, however, to agree on but ONE thing -- we were hoping Ethanol (and other alternatives to "gasoline") would buy us time to wean ourselves from Dino Sourced Fuel.
We seem, also, to at least concede we have a limited supply of petroleum on the planet -- even if we differ as to "how long" we have before we literally run out.
Several of us have asked the apparently rhetorical question "would we even be having this discussion if the pump prices would drop and we were actually able to read stories about "ample supplies" on the low end to an absolute "glut" on the high end?"
The responses are varied, but somewhat of a theme seems to have emerged, and that appears to me to be: If we saw the price of a bbl of oil drop by $10 or $20 or even more, we believe E85 would be hard pressed at almost ANY realistic price to compete with dino-fuel (E0 up to E10.)
The great hand of Adam Smith would probably do GM and others a favor and cause them to be able to sell (and offer) even more and bigger SUV's to a market that seems to think a Chevy Tahoe is finally not too small, now that is has a third row rear seat (even if it only gets used 3 times annually when the grandparents are in town.)
I, for one, have been a proponent of plowing some money (more money, perhaps even OUR money -- perhaps) into the vast resources we know exist (800+ trillion bbls) right here in the Western US.
I, among several (many?), have been mad as hell and not willing to take it any more -- about the $.51/gallon subsidy, i.e. Further, I have been mad as hell about the paucity of information about the MPG that the FFV will attain when using E85 vs gasoline.
Bygones.
Anyway, here is what I found to further bolster the notion -- the notion of a soon to come "oil glut" -- (and one would imagine, drop, substantial drop, in pump prices.)
Dateline 4 July 2006:
"Moody’s foresees rapid supply growth continuing to exceed that enjoyed by demand over the next couple of years.
Indeed, supply growth should accelerate in 2007 and 2008, as we increasingly start to see the fruits from the previous [2005 forward] price rally begin to feed through into heightened capacity growth.
Moody’s foresees crude oil prices slipping gradually over the next couple of years, falling below US $50 toward the end of 2007, as our forecast for more market surpluses increasingly filter through. Such a forecast, however, does not fully account for the possibility of further outbreaks of heightened geopolitical uncertainty. If, for example, the U.S. was to tire of Iran's nuclear energy programme and decided to invade, oil prices would skyrocket. However, we have focussed [here, today] on our base case scenario, and saved talk of geopolitical crisis for another time.
For now, we return to Moody’s underlying forecast of further oil surpluses, and no great escalation in geopolitical uncertainty, taking oil back below US $50 by late 2007, and falling into the low US $40s by the summer of 2008. Crude oil prices are forecast to fall, as the global market increasingly realises that the recent past was not in fact undersupplied."
The full text of the article and charts and graphs and stuff are here:
Klik
Lots of reasons to wonder if all this E85 support and investments will be for naught? :confuse:
Its "Magical Oil Fairy" and as Socal has pointed out the Magical Oil Fairy wants her (or his) name capitalized. :shades:
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
You bet you're going to apologize. I'm not going to start paying $5 per gallon for fuel just because you decided to upset Her. Grab those rosaries and head for the confessional, stat.
The Magical Oil Fairy is Catholic? :confuse:
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"The margin between global supply and demand narrowed in June, with both around 85 million b/d, according to preliminary data estimated by Oil Market Intelligence,..."
energyintel.com
What would we do without ethanol fuel? Demand would obviously exceed supply and cost for fuel would be even higher.
"People will NOT buy FFV's..."
Several million people own FFVs so your statement is incorrect.
King Corn, is that like King Coal, maybe they are brothers.
"How is oil, per se, subsidized? Please explain." Almost all industry is "helped" by government. That is the nature of the beast.
"The evidence, thus far, says ethanol is a synonym for false promises."
The opposite is true. Ethanol is one of the great success stories. I would suggest you read "Homegrown for the Homeland" from RFA.
As global oil demand grows, ethanol and E85 will play a bigger part. The easy oil has been found. From now on it will cost more and more to produce. E85 may end up only supplying 20% of our needs. Still, that 20% will be very important.
The statement "ethanol has neither reduced dependence on foreign oil..." Is true if you consider that US production of oil has decreased faster than can be replaced by ethanol. We will be dependent on foreign oil for a long time, unless somebody decides to invade Canada, in which case.......
"As far as the study by the National Corn Growers Association (NCGA) would you expect them to tell us that corn ethanol is energy negative?"
Yes, I would. Why would they lie to their members?
Ethanol fuel (speaking of E85) is not making a dent in our use of oil from a practical standpoint. Three "popular" sources (at least) of this information have been cited and recited in this thread for weeks.
The requirements in terms of the percentage of our farm land (if based on corn) to make E85 in any significant numbers literally mean "taking food out of our mouths" -- effectively transferring the costs. Corn exports would be cut and if taken to the extreme stopped altogether were we to attempt to make the amount of ethanol we need to make the dent we need (71% of our availble farm land would be required -- according to Popular Mechanics, also cited in this thread for months.)
The percentage of people (not companies, not government, not fleets, etc) using FFV's is small, despite the numbers that are quoted (6 million) as having been sold) using FFV's is still quite small. Further with the limited distribution of E85 it has been suggested that the E85 vehicles (FFV's) may find themselves unable to locate E85 and hence run regularly on gasoline (perhaps E10.)
The notion of widespread adoption of FFV's by individuals and families is difficult to support when the costs and inconvenience posed are factored in.
For E85 to catch on, it has to cost less than E0 -- and this must also take into consideration the approximate 30% hit on MPG's an FFV takes when using E85 vs E0 or E10 (technically a gallon of E10 will go about 97% as far as a gallon of E0, but a gallon of E85 will travel about 70% as far as E0, etc.) At three dollars per gallon for gasoline, E85 would need to be about a buck less per gallon just to be "even" with the cost of gasoline.
If the $.51 per gallon "incentive" (from the public trough) is suspended, the price of a gallon of E85 would have to drop, effectively by $1.41 to break even with the cost of a $3.00 gallon of gasoline.
Most folks once they "do the math" will, see the economic disincentive that accompanies ethanol (at present.)
As the price of fuel rises, there has been, thus far, a rise in the price of diesel (of all sources), gasoline (of all sources) and of ethanol (which is mostly corn sourced at this point in time.) It is difficult to imagine the cost of one fuel will be immune from the vicissitudes of the market.
With clean diesel mandated and blutech technology already to go (and with the energy act of 2005 offering tax credits to those who elect diesel), some experts predict diesel adoption could grow from sub 1% to nearly 20% more rapidly than E85 production AND distribution can be brought on line.
Time and again, Big Oil has had its downs and ups. It is taxed liked there's no tomorrow and when oil companies have tough times, we have not historically rushed to support Big Oil from the public trough. Ethanol is a non-starter, or apparently is thought would be, without the $.51 per gallon "help" from our pockets. We also are trying to protect King Corn from Brazilian sugar ethanol with legal rather than free-market economic barriers.
More and more sources of oil have been located and as each year passes this new oil becomes more and more economical to extract.
ICE technology continues to provide ever cleaner and more efficient motive force for our cars and trucks. It seems that we continue to have mini-ICE-breakthroughs on a regular basis with no reason to believe the end of theses improvements is anywhere near.
E85 in the face of ample oil will remain a very minor player, it will play a smaller part, in fact. Yet, with the mandates provided in the energy act of 2005, valiant efforts, investments and publicly funded incentives, E85 may "burn brightly" for a brief period -- it is limited currently by cost, price, distribution, low MPG's in FFV's, little, if any, greenhouse gas amelioration and so on.
As global oil demand grows, we will tap into our vast resources in Colorado, Wyoming, etc, offshore, ANWR and on and on.
Meanwhile we will, hopefully, work on alternatives (including renewables, such as ethanol and bio-this and bio-that) that may include synthesizing liquid fuels from coal and soybeans and seawater for all we know.
Ethanol based on most of the postings here and thousands of other secondary sources (since most of us have not tested and verified the claims of costs, distribution, pollution and economics) is full of false promises. If taking my tax dollars and propping up an undertaking defines success, well, maybe, just maybe, there is some slight success.
As global oil demand grows, we will open the spigots wider and wider and as the price at the pump falls, folks will be hard pressed to choose E85 unless something changes the economics and performance capabilities of FFV's and E85 to make it the clear choice.
People, most people to be accurate, will act out of either fear or greed (to be blunt) -- E85 and FFV's, appear to not be able to appeal to altruism as the economic disincentive is almost as high as the lack of availability of the product itself.
The only way E85 will supply 20% of our needs if it is forced to do so via mandate.
Prohibition didn't work either.
As unlikely as even I believe it to be, the economic and technical argument favors diesel usage at 20% more strongly.
And remember, at 30% diesel penetration we cut our need for foreign oil by 1.4bbl per day, coincidentally the amount we import from Saudi Arabia every single day. And were that to come true, our cars will go further and quicker on every gallon (20% further than gasoline which effectively means 50% further than E85 at a cost which appears would remain about the same as mid-grade gasoline.)
I conclude with one question, what do the oil companies get from the public trough, help in building new refineries? Pull the other one. :surprise:
I would not consider creating an infrastructure for ethanol distribution to be insurmountable. If oil companies can move oil sand or drill in thousands of feet of water creating a distribution system for ethanol is doable.
"Logically, though, why would any mfgr. try to sell (or develop) something like an 'ethanol' engine for a fuel that doesn't even exist in most parts of the country."
Actually, the answer is simple. If Ford, GM and DC want to push the industry along they would build the cars and let the customers create the demand. In marketing, sometimes you put the cart before the horse. I just hope their latest announcements about producing more FFVs are less blah, blah, blah... and more action.
Because if the public was convinced as I am that corn ethanol is a negative energy product they would get no public support. I realize that Congress basically respond to lobbyist and the size of their checkbook. The Corn Lobby is a BIG one with a big check book. Just like the oil lobby is big. If you read all the studies, as I have read many of them. Corn ethanol is not very sound. Not to mention the damage the corn growers are doing to the environment.
There is a difference between a subsidy and a tax writeoff. All businesses get to writeoff expenses incurred in the process of doing business. That is what the oil companies do. I did not here a public outcry when oil dropped to $9 a barrel in 1998. The oil companies in Alaska were not making any money, Or very little. I see the profit margin for Microsoft and no one suggests tacking an excess profit tax on to them.
If growing corn and making ethanol is a legitimate source of alternative energy it does not need a buck and a half a gallon subsidy to be produced. It does not need the protectionism of a 54 cent per gallon tariff on outside ethanol coming in from Brazil. We don't tack extra tariffs on oil coming from Canada or Mexico to protect our oil interests. That would be an extra $22.68 per barrel added to foreign oil coming into the US.
The American public are getting screwed by the likes of ADM on ethanol. It has raised the price of gas to comply with the flaky mandate.
Take off the subsidies, tariffs and mandates. Let's see if it is a legitimate alternative fuel source. Let ADM and Verasun writeoff the building of the ethanol plants instead of you and I paying 90% of the cost to build them. I can tell you that not one more ethanol plant would be built. Because ADM knows it is a loser without being paid for by tax dollars. Corn ethanol is NOT a legitimate business venture in any way shape of form.
It is a legalized scam based on the preponderance of evidence.
False promises to shareholders are bad enough, but false promises to the American People -- oh, yea, I forgot, have too often been par for the course.
Ethanol is, what, about a par 3?
OK, when the oil pipeline in Alaska came on line in 1977 oil was about $35 per barrel. Of that $6 per barrel went to the state of Alaska and about $6 per barrel went to the Federal government. At that time 85% of the state of Alaska revenue came from oil. Not sure what that is today. Still over 60%. My question to you. How much money are the states getting on every gallon of Ethanol and how much is the Federal government getting? My guess is NOTHING. How much money will go into the coffers of the political candidates that vote for the Ethanol subsidies? My guess is a Bunch. Ethanol is a loser on so many levels it is hard to fathom it being produced.
The breakdown for E0 (and as far as I know E10) is such that a significant portion of the price per gallon is paid to government as taxes.
With Ethanol (E85) the government is giving back to subsidize "E" -- at this point, it is not only a loser for itself it is a loser for the taxpayer.
Oddly, by mandating "E" the energy act of 2005 has created a business model where without the subsidy and laws mandating our use of 2.87% E, etc etc etc, there would be no incentive (free market wise) to invest.
I hope the government wants to subsidize this cool idea I have for buggy whips, yea, that's the ticket, I need a $5.00 per whip subsidy to make a go of it!
E85 is about $3.47/gal in terms of energy compared to regular unleaded: not competitive.
Break even price in energy terms for E85 is about $2.22/gallon with $3.00/gallon gas.
Some rough math: if the $0.54/gallon tarriff was removed the cost of E85 would be about $0.46/gallon less (85% of $0.54 tarriff).
This would at least mean energy cost would be the same.
In an open market supply and demand will always be very close.
Several million people own FFVs so your statement is incorrect.
Owning a FFV and using E85 are two different animals. Most people who own a FFV will not use E85 simple because 1.) it costs more to drive on a per mile basis and 2.) it is very hard to get.
The opposite is true. Ethanol is one of the great success stories.
Yep you see gas stations all over selling E85, oh wait thats not true is it.
Oh ok there are millions of cars using E85, oh wait thats not true either.
So how its ethanol a success story when it is looking more and more a failure?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
1930's Fuel ethanol gained a market in the Midwest. Over 2,000 gasoline stations in the Midwest sold gasohol, which was gasoline blended with between 6% and 12% ethanol.
1983 The Surface Transportation Assistance Act increased the ethanol subsidy to 50 cents per gallon.
1984 The number of ethanol plants in the U.S. peaked at 163. The Tax Reform Act increased the ethanol subsidy to 60 cents per gallon.
1985 Many ethanol producers went out of business, despite the subsidies.
Only 74 of the 163 commercial ethanol plants (45%) remained operating by the end of 1985, producing 595 million gallons of ethanol for the year. One reason for producers going out of business was the very low price producers could receive for their ethanol (even with a subsidy of 60 cents per gallon), since the prices of crude oil and gasoline were so low. Despite the very low price of corn, which is the main driver of the cost of producing ethanol, nothing was enough to prevent the high rate of market change.
Who guaranteed the loans to build those ethanol plants in the 1980s? You guessed it our Congress spending our money like a drunk sailor.
These subsidies for loser "Corn Ethanol" have been around a while. It gets better:
1992 The Energy Policy Act of 1992 (EPACT) provided for two additional gasoline blends (7.7% and 5.7% ethanol). EPACT also defined ethanol blends with at least 85% ethanol as “alternative transportation fuels.” It also required specified car fleets to begin purchasing alternative fuel vehicles, such as vehicles capable of operating on E-85 (a blend of 85% ethanol and 15% gasoline). The EPACT also provided tax deductions for purchasing (or converting) a vehicle to that could use an alternative fuel such as E-85 and for installing equipment to dispense alternative fuels. The Clean Air Act Amendments mandated the winter-time use of oxygenated fuels in 39 major carbon monoxide non attainment areas (areas where EPA emissions standards for carbon mioxide had not been met) and required year-round use of oxygenates in 9 severe ozone non attainment areas in 1995.
1997 Major U.S. auto manufacturers began mass production of flexible-fueled vehicle models capable of operating on E-85, gasoline, or both. Depsite their ability to use E-85, most of these vehicles used gasoline as their only fuel because of the scarcity of E-85 stations.
1998 The ethanol subsidy is extended through 2007 but will be gradually reduced. The ethanol subsidy of 54 cents per gallon will be reduced gradually to 51 cents per gallon in 2005.
So we pay and pay as the saga continues. We have been victims of the corn ethanol lobby for a long time and it only gets worse.
2002 U.S. automakers continued to produce large numbers of E-85-capable vehicles to meet federal regulations that require a certain percentage of fleet vehicles to be capable of running on alternative fuels. Over 3 million of these vehicles were in use.
At the same time, several States were encouraging fueling stations to sell E-85.
With only 169 stations in the U.S. selling E-85, most E-85 capable vehicles are still operating on gasoline instead of E-85.
2003 A 1998 law reduced the ethanol subsidy to 52 cents per gallon starting January 1, 2003.
As of October 2003, a total of 18 States had passed legislation that will ban MTBE - but none of the states that are major users of MTBE, such as CA, CT, KY, MO and NY have their ban in effect yet.
California began switching from MTBE to ethanol to make reformulated gasoline, resulting in a significant increase in ethanol demand by mid-year, even though the California MTBE ban does not go into effect until January 1, 2004.
New York and Connecticut are planning for increased ethanol use in late 2003 because MTBE bans in their states will also take effect on January 1, 2004.
So as our tax dollars get swallowed up by the Corn states our gas prices increase to satisfy a mandate that is totally bogus. Modern engines compensate via the O2 sensor. Oxygenated fuel is not needed at all, Period.
All data from the DOE: This is for the pro ethanol readers, that think this is such a great new alternative fuel.
http://www.eia.doe.gov/kids/history/timelines/ethanol.html
Because it is in their best interest to promote ethanol. Which means that any pro ethanol statement has to be taken with a grain of salt.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
But not as good as if you ran regular gas in the base I4. You lose out with e85 either way so why go there?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I cannot prove this, since it is not possible to really have much of a test of this, but -- it still seems that for E85 to be sought or even selected if it were to be as easy to locate as "gasoline," it must not be the same cost, it must be lower, even if only slightly lower.
Your numbers, approximate my guesstimated numbers based on amount of distance per gallon one can go in an FFV using E85 or gasoline (E85 goes about 70% as far, meaning that if gas is $3.00, E85 would have to be ~ $2.10 to be even with gas in terms of energy cost.) Of course my calculations place no value in dollars on the cost of needing to go to the fueling station more frequently.
If I drive 500 miles per week and my gas FFV will go 600 miles on a tank, I would need a fill up once per week; conversely, my E85 FFV would only go some 400+ miles per tankful and I would need to stop more frequently (6 times for every 4, E85 vs gasoline, i.e.)
If one places some $ value on the time it takes to stop for gas, 4 times vs 6 for the same distance traveled, well then the price of E85 needs to drop further still, etc.
Now, I am not sure what the $.54 tariff you are referring to is for/from -- I have been using, instead, the $.51 per gallon subsidy that artificially lowers the price of a gallon of E85.
Therefore, IF the price of gasoline is $3.00/gal and the current pump price of E85 is $2.60, the non subsidized price would be +$.51, or $3.11. We can therefore determine with some fuzzy logic what the price per gallon of E85 would need to be to motivate someone to use it in his/her FFV ("guilt factor" included or excluded as you deem appropriate.)
Make all these same calculations using a modern diesel as is offered all over Europe and elsewhere, and based on economics first and "performance lust" second, diesel would pretty much destroy E85's chances in the market.
Of course this is very unlikely to happen without a whole bunch of choice of diesel models in cars costing UNDER $40,000 -- and we will see the first wave of Euro diesels within the next 12 - 18 months, but most of them (VW excluded) will be well over $40K, meaning market penetration will likely only pick up a very small amount.
E85 70% MPG with an effective price per gallon disadvantage TODAY (vs gasoline.)
Diesel 120% MPG with an effective price per gallon advantage TODAY (vs both ethanol -- and how -- and gasoline.)
The next two years, for starters, could be very interesting. Even our somewhat financially strapped state, however, is coughing up big bucks to aid in the creation of distilleries, er, refineries for ethanol -- they drank the kool-aid apparently. Or the dole from the public purse "made them do it." Or both.
And this also would be one the the problems - when was the last time that the 'Detroit 3' 'pushed' the industry. Innovation of any kind - look to the Japanese and the Europeans and they seem to be 'pushing' hybrids and diesels, respectively. Own an 05 Avalon that is blessed with a V6 that is near revolutionary in terms of the power it makes relative to the near 30 mpg it gets - an engine Toyota and Lexus are using throughout, and something that could never have been 'pushed' to market by Detroit - they simply do not have the money to do these kind of things.
If Nissan (or Toyota) is dumb enough to buy GM, then maybe, but not until either of those buyers can figure out a way to get out of GMs labor obligations and whatever political problems all the layoffs would create. A major player needs to champion E85 if it is going to have a chance, and that would exclude GM, Ford, and possibly even DC.
This is a tarriff on ethanol imports. Other countries, Brazil in particular, could export ethanol to us if this was gone.
the $.51 per gallon subsidy that artificially lowers the price of a gallon of E85
Except right now most of that subsidy is going to the owners of the ethanol plants, not being used to lower the price.
If one places some $ value..... then the price of E85 needs to drop further still, etc
I agree with you: how much less does it need to be? If E85 was $0.05/gallon less (in real terms, adjusted for energy content) would people switch? Would it need to be $0.10/gal?
Sometimes the prices (with the subsidy of $.51/gas firmly in place, don't forget) are the same for gasoline and E85, often E85 is slightly less and sometimes way more (temporary issues have shot the price of a gallon of E85 above the price of gasoline on several occasions since Katrina.)
Right now, there is only disincentive (largely) to use E85 from a money standpoint and a major inconvenience disincentive due to most folks inability to even find an E85 fueling station (we will soon have 10 E85 stations serving the entire state of Ohio -- woo woo!)
Yea, I guess it does qualify as a success story.
I put it right up there with Divx DVD's! :shades:
I don't particularly see this as being a problem. There is a minimal cost to the manufacturer for converting a gas-powered car to FFV, and consumers already in the market for a gas car can buy a FFV vehicle without any sacrifice. (In constrast, a switch to diesel is drastic, in that it forces the consumer to actively make a choice that includes a drastic change in fuel purchasing habits.)
Toyota has already announced that it will bring FFV to the US in 2008. I am assuming that other automakers may do the same if ethanol maintains some allure as an alternative or if it gains a price advantage, because it costs the automakers very little to participate and allows them to market themselves as being on the E85-enviro bandwagon.
That doesn't necessarily mean that consumers will start using the fuel, which would take distribution and, I suspect, lower prices to encourage its use. It also doesn't necessarily mean that it would be produced in sufficient quantities so as to make much of a difference.
So on the whole, I don't see getting the vehicles into the hands of the driving public to be particularly difficult. Particularly with mandates or incentives, it would not be a challenge to get every new gas vehicle sold to have FF capability within the next several years.
Biodiesel pump prices are also above those of gas in my market, yet I don't use that as an argument against biodiesel.
We need to accept that current pump prices of alt fuels are not necessarily a reflection of future pump prices. Increased production and distribution can be expected to lower prices, assuming that normal supply-and-demand metrics apply. You don't make decades-long policy decisions based upon what is happening at one specific fuel station today.
I cannot prove this is the case, but it seems to be an accepted notion and a plausible conclusion.
In any case, beats me -- re price -- my guess is that a nickel might not be enough, but that $.10 would probably be a good place to start.
This means, the price would have to be $2.01 when gasoline was $3.00 essentially (based on the MPT -- miles per tankful -- numbers.)
Good luck figuring out how to subtract the $.51 public money from a gallon of E85 and have it sell at about 2/3 the price of a gallon of dino-gas.
The ethanol proponents, perhaps, can help the other side with our conclusions, hopefully.
:confuse:
My pea brain can't make the numbers work favorably.
Basic point -- increased production scale should reduce production costs and allow for lower prices.
It's the same principle by which Henry Ford could lower the price of a Model T by two-thirds, simply by building more of them, and how that impetus caused others to follow suit.
The idea behind subsidies of this sort is to encourage companies to enter a market. Once they have entered the market, they have enough time and money invested in it to work toward making a profit by expanding sales and increasing distribution. The subsidy should stimulate initial market interest and facilitate entry, and the market should do the rest.
Whether or not this will be true for E85, I don't know, but there really isn't much reason why it shouldn't happen if the usual drivers of the free market apply. Once producers get into the business of production, they should be motivated to turn their infrastructure into cash flow, which means making stuff that they can sell and convincing people to buy it.
However, I do believe there is "interest" in knowing.
Were folks from all over to share "today's" prices, we, at the very least, get a sense of what is happening, since if even 10 or 20 folks shared numbers it would be, right now, not statistically without merit.
Here in Ohio, if I could drive to an E85 pump in my city and post today's prices and a dozen or so other folks would do the same in a wide geography, we would have part of the required number of snapshots when, if shown in succession over time, would give us some indication of "trends."
Perhaps these data would be inadequate to feed the policy decision making machine -- perhaps they would be instrumental.
Most of us have at least a curiosity about such data and whether we use it to develop arguments or support theories will be based on the many factors including anecdotal evidence (both supportive and contradictory.)
From sea to shining sea, I would like to see E85 and E0/E10 pump prices.
Gas prices shot up around here the last few weeks by about 30 cents a gallon. Diesel and biodiesel are now cheaper than regular gas (for the time being). Even if they were more expensive the greater mileage overcomes that.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The steepness of the price drop is, for me, difficult to believe is possible "soon enough" to allow E85 to become viable without the public teat.
I then couple all of these "hard to fathom" events with the somewhat widespread belief that the price of oil is set to fall sufficiently to give ethanol a run for its money -- meaning that ethanol would have to sharply decrease in price AGAIN in the face of what some think could be $50, $40 or even $30/bbl oil.
I do not wish our alternative energy R&D and "success" to be in the past tense. I just believe it will require non-public funding in a free market rather than a subsidized and taxpayer propped up market.
:shades:
More likely is that the subsidy reduces the cost by less than the subsidy. In other words eliminating the 51 cent subsidy will cause the price to increase less than 51 cents.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
If the discussion is about the future of alt fuels, then this fixation on current pump prices is not only almost entirely irrelevant, but it's actually disingenuous.
It should not surprise anyone that alt fuels are currently not cheap, because of the limited production and distribution. This is especially true in the case of ethanol, because the E10 mandate imposed increased demand before the supplies were ready for market, which has put ethanol pump prices out of their likely equilibrium.
Again, that discussion would be the intellectual equivalent of claiming that cars would never be viable because they tended to cost $2000-3000 back around 1910, an enormous sum that put them well out of reach of most of the market. It would a bad argument, because it failed to account for the impact of mass production on the price of the product.
So it's a bad argument, and I wish it would get dropped once and for all. While it is a reasonable argument to show why E85 isn't flying off the shelves today, it doesn't have any bearing on what will happen as supplies are increased.
And again, let us remember that wholesale ethanol prices were well below the price of gasoline prior to the E10 mandate, so you are focusing on a pricing condition that has been with us for only about the past year. It's clearly a short-term outcome, and not necessarily a barometer of what is going to happen in the future.
Most likely not as it would increase the demand of the raw product (right now corn) and raise that price offsetting any benefit in economies of scale.
It's the same principle by which Henry Ford could lower the price of a Model T by two-thirds, simply by building more of them, and how that impetus caused others to follow suit.
Most of the price reduction of the Model T was due to streamlining the production process (remember you can have it in any color you want as long as its black?).
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
But, even if 2/3 of the subsidy were to be the amount the increase, it only serves to force E85 into an uphill battle since it is currently difficult to make E85 attractive even with the subsidy.
Do you have any info as to how much of the subsidy actually is used to reduce the pump price?
Do you have any info as to how much of the subsidy actually is used to reduce the pump price?
I couldn't say, my best guess would be in the 60-75% range, it all depends on the market.
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That seems unlikely. An increase in commodity prices will stimulate new suppliers to enter the market in their efforts to capitalize on those higher prices. The resulting supply increase then causes prices to decline.
Much of the cost of these alt fuels is going to come from related costs of processing, transport, etc., not from the commodity itself. To the extent that processing costs per unit can decline, there should be competitive pressures for retail prices to fall.
Moreover, the data would hardly be lacking in candor. The data would not necessarily -- on its own merits -- prejudice someone's thinking either.
If I was of a mind that today's gas prices were the bellwether of all things (and gas prices) to come, perhaps, just perhaps, the data would be misleading and possibly specious (but hardly disingenuous.)
None of this is simple -- this conclusion is self-evident based on the number and quality of posts just on this one forum.
Yet, you can almost bet that the daily/nightly news will soon have a "Today at the fuel station" chart detailing the price per unit of gas, gasohol, diesel, bio-diesel, E85 and so on. Trends will be identified via such snippets of information. There may be some inaccuracies in the data, there will be a wide variety of interpretation, but most would be hard pressed to claim it lacked relevance. It will be influential -- somewhat akin to the way "consumer confidence" can effect the stock market and even the Fed's behavior.
Yesterday, when oil hit $75+/bbl (and the prices at the pump here in River City rose to nearly $3.20 with spot prices as high as $3.39), it might be safe to conclude that the future prices will be higher still or that shortages are right around the corner.
There are, however, many voices (on all sides of the "oil issue") that can be found that proclaim "enough is enough" get ready for prices to fall once it is widely understood that our current dilemma is NOT based on shortages (although some still believe this is just a re-run of the situation we endured in the '80's era -- during which time shortages did occur.)
We are not having high prices based on a supply issue -- unless there is collusion on a scale that is unimaginable designed to keep the "truth" from the world that we are running out of oil (or not, depending on your point of view.)
We all "know" that oil is not infinite -- but, even the most pessimistic estimates suggest that no one alive today will see the end of plentiful oil. The optimistic estimates claim plentiful supplies will go on for multiple generations.
The "best" scientists and economists and business execs in the energy business may not agree about every nit, but generally speaking oil will be here for lifetimes to come.
"At what price," is a germane question, don't you think, however?
Over time, for a variety of reasons, the price will rise, of course. The next phase of this progression is predicted by these economist and business types to be double digit price per bbl falls (some claim price declines of over $30 per bbl within 2 - 3 years, others suggest more modest declines of $10 to $20/bbl.) Scientists continue to develop new ways to find, extract and refine oil from several heretofore untapped sources and it will ultimately come about that our public policy shall erode and we will permit extraction from regions previously labled "hands off."
Internal combustion engine engineers working in concert with electrical engineers and other scientific and inventive types continue to make cleaner, more powerful and more efficient ICE power plants.
Even Mr. Gore is somewhat sanguine on the possible outcomes -- that is, even Gore is not doom and gloom entirely (and this is NOT in any way encouraging any kind of political debate, I'm not going there.)
The row E85 will have to hoe will become rockier and harder with even a $10 per gallon drop in the price of a bbl; likewise E85's struggle will increase once we start cooking the oil we already know about in Colorado and Wyoming, not to mention the other sources we already know about that contain vast quantities of dinoleum.
Moreover, as ICE's (both spark and compression) become cleaner and more powerful AND more economical, folks will most certainly gravitate to proven performers and ever more powerful passenger conveyances.
The need for alternatives is not up for debate from what I can tell. We all seem to agree we can't just keep doin' what we're doing without some mid to long term consequences.
But E85 seems set to buy what? Time? Cleaner air? Add substantially more than "filler" to our dwindling gasoline supplies (as if they really were dwindling)?
Thus far we have suggested and in some cases demonstrated that E85's promises show slim to no chances of helping in any of these areas -- and slim is packing his bags for a long trip outta here.
:surprise:
Of course we are. In the case of oil, suppliers are pumping all of the oil that they can, but demand growth has overwhelmed current supplies, and the capacities can't be increased quickly enough. (The supply of oil at this stage is somewhat inelastic.)
In the case of ethanol, we had a change in legislation which mandated an increased level of demand, again more quickly than the supply needed to serve that demand could be increased. If supplies were increased sufficiently (and high prices will encourage new players to enter the market and current players to expand production), prices should decline.
That is if there is room for additional production. However that is not the case for corn, corn production is fastly approaching being maxed out. Soybeans are not much better and we are to far away from switch grass and biomass for them to make a near time effect. Increasing production in ethanol will drive its price up if only in the short term (under 5 years).
To the extent that processing costs per unit can decline, there should be competitive pressures for retail prices to fall.
While processing costs will go down I don't see it being a significant amount especially since it is estimated that processing plants cannot run at a profit without a subsidy. New ones going up will just be white elephants.
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