I have indicated my enthusiasm for spirited argument, contradiction and debate on several occasions. I am wondering if it is possible you believe the following is without any verisimilitude whatsoever (4 July 2006 analysis):
o Prices have risen these past three years, despite the global market tending toward oversupply, as heightened geopolitical uncertainties, a general commodity market bull run, and refinery bottlenecks have prevailed.
o When the underlying market fundamentals wrestle back control, prices will fall as the speculative froth is unwound.
The link to the full text I posted yesterday, I would have imagined would have, in the best Monty Python sense of the word, sparked at least contradiction -- but instead the analysis has enjoyed a roaring silence.
Further, in the same analysis:
Prices have more than tripled since late 2001, while the global market has somewhat surprisingly tended toward oversupply. Between 2001 and 2005 (inclusive), only one year has carried a global deficit, 2002, with an average annual deficit of 730,000 barrels per day (b/d) recorded. The others—2001, 2003, 2004, and 2005—carried overall global surpluses, of approximately 100,000 b/d, 450,000 b/d, 460,000 b/d and 330,000 b/d, respectively.
The global oil supply has been in a condition of overall excess for some three years, as rapid supply growth has more than made up for the sharp increase in demand.
With only a little bit of sarcasm, I say, ". . .really, it's been in all the papers!"
Finally:
"Despite such bullish market circumstances, Moody’s Economy.com remains essentially bearish on oil, as we continue to believe that a large fraction of the current oil price (above US$70) is speculative froth. As the market increasingly realises that current oil supplies remain relatively plentiful, with the market tending toward a global surplus—with forecasts of more to come—prices will correct on the downside.
Moody’s Economy.com 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 price rally begin to feed through into heightened capacity growth.
Crude oil prices are forecast to fall, as the global market increasingly realises that the recent past was not in fact undersupplied."
From a consumer's point of view this seems to be encouraging for the pump price of dinoline and discouraging for the pump price of ethanol. This would tend to have an effect, yes?, on the enthusiasm to invest in refineries, so to speak, that will find it increasingly difficult to compete on price or availability with the dino stuff.
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
The ethanol subsidy was 40 cents in 1978. We built 163 ethanol plants with tax dollar guarantees during the early 1980s. We kicked up the subsidy to 60 cents in 1984 to help the sinking ethanol ship. By 1985 55% of the ethanol plants were shut down. It did not fly 20 years ago, what will make the difference this time? If ethanol is so great why not take all subsidies and tariffs off and let the market decide. Because the mega ag companies are paying big bucks to our Congress to keep the scam alive.
The supply of oil while not infinitely elastic is, however, VERY elastic.
And, this too, no kidding, "is in all the papers." :surprise:
My points, of late, have been encouraged by reading and digging and googling and researching the subject of known oil supplies and our abilities and willingness to get at it.
We're heading for a glut or at least a plentiful oversupply if we stay the current course. And, my best guess says we certainly will at least for the rest of this decade.
This "rubber band" of supply is nowhere near at the limits of its elasticity.
You can argue that the market is largely speculative and frothy, but the increasing demand for oil and gas in developing countries and the efforts being undertaken to explore for higher cost sources of oils tells me that the data isn't as conclusive as you might like to believe.
Sharply falling oil prices would certainly deter market interest in biofuels, no doubt about that. I would also not be surprised if oil prices declined somewhat from current levels.
But oil at $50 per barrel, adjusted upward for the CPI, is certainly high enough to make alternatives economically viable. And unless you are expecting the PRC and other nations to sharply contract, I can't see how anyone could expect a sharp downturn in pricing.
Again, a key difference between the seventies' oil crunch and today's situation is that the earlier OPEC cartel was entirely artificial, so it was vulnerable to failure. (Greed and the free market doom most cartels to fail over the long run, and OPEC proved to be no exception.) Here, oil demand is growing dramatically and suppliers don't appear to be manipulating pricing, so the circumstances are quite different, and pricing can't be expected to plummet without fundamental changes in demand that don't strike me as likely. No one knows for sure, but I'd bet that the days of $10 oil are long gone.
It did not fly 20 years ago, what will make the difference this time?
Because oil prices are not likely to collapse, as we don't have an OPEC cartel driving the current price increases. Very different circumstances to the late seventies, the price drivers are completely different.
That may or may not happen. I think we will see $30 oil again within the next 3 years.
What I don't like about the CORN ethanol process is it is so far removed from reality with its subsidies and tariffs that it will just go away when and if a better source of ethanol arrives. My reading tells me the plants built to process corn into ethanol will not be of any value in processing the likes of Switchgrass or wood chips. It is an entirely different process from beginning to end. So we throw all this tax money to ADM to build Corn ethanol plants, then we give more to build biomass plants to process whatever. We know that Corn to ethanol is marginal in what you get for what you put in. Why not just spend the money on getting a viable alternative fuel to start with?
That may or may not happen. I think we will see $30 oil again within the next 3 years.
Maybe in your dreams, but unless suddenly everything becomes far more fuel efficent (like twice as efficent) you will never see $30 a barrel oil again.
We know that Corn to ethanol is marginal in what you get for what you put in. Why not just spend the money on getting a viable alternative fuel to start with?
And the Lords people said AMEN!
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
What I would like to believe is that we will develop a perpetual motion engine that can be put in vehicles and used to create pollution free energy limited only by demand.
Now that is what I would like to believe.
What I cannot vet, or cannot vet vocationally is, this:
"As the market increasingly realises that current oil supplies remain relatively plentiful, with the market tending toward a global surplus—with forecasts of more to come—prices will correct on the downside. "
Nor can I vet this:
"For now, we return to Moody’s Economy.com’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."
We will have to wait until 2007 and 2008 to determine the accuracy of this forecast.
Not even this analysis suggests $10 per bbl oil. Yet, the Rand study proffers $20/bbl oil (in 2005 dollars) is possible based on the initial production of "cooked shale" from the Colorado/Wyoming reserves.
Oil demand may indeed be growing dramatically, but all the printed reports, opinions, commentary and analysis I have run across these past few weeks indicate that supplies are MORE THAN keeping up with demand with, as the man said, "forecasts of more to come."
Now, if diesel makes it in such circumstances (assuming you lend credence to the author's integrity and capability), it will be because diesel will offer "hot cars" in cool packages that sip fuel (even if it is cheaper then than it is now.)
With a price of a bbl at $40, rather than $75, there will be a dramatic decrease in the price per gallon -- for if there are no shortages and prices are that low (unless taxes are raised beyond the dreams of unrestrained governmental avarice), there will be yet another hearing and this time the oil companies will not find any slight of hand that will justify high pump prices with a fall in the per bbl price approaching 50% (and no, I am NOT suggesting that gas will in lock step fall 50% in price at the pump.)
The current ethanol dole and perhaps the ethanol scam as it appears to be to some, will not survive as it currently stands -- especially with its ability to provide only about 70% of the MPG of gasoline.
I came into this forum truly believing E85 was the direction we were headed. I no longer believe this. I'm truly disappointed with the equivalent price to gas, 30% less MPG, government subsidies to the wrong folks and still no stinking fuel stations. This is politics at its worst.
I think fraudulent is the best term to describe the E85 scam at this time.
I believe you and I are part of the 80% that thought Ethanol would be good for the country. What amazes me is so many of the Congress have been involved in this scam for the last 30 years. Just like the Energizer Bunny, the money keeps going and going to ADM.
Perhaps a solution to high ethanol prices would first be to eliminate the $0.54/gallon import duty.
Import quotas increase prices by design.
If there is sufficient production or capacity for production outside the US to create an export market to the US, then yes, prices would almost certainly decline.
So yes, you have made perfect sense. However, this might slow the growth of domestic production, so it may not help in achieving the government's objective of encouraging domestic sources to get into the business.
Perhaps a solution to high ethanol prices would first be to eliminate the $0.54/gallon import duty.
That would be a good start. It would put the pressure on ADM and Verasun to lower prices or get out of the business. Right today they have a license to steal and we are the ones they are stealing from. Can Corn ethanol compete with $1.01 per gallon delivered to a US Port.
According to U.S. International Trade Commission statistics, we imported about 160 million gallons of fuel ethanol last year. 160 million gallons represents about 5 percent of total domestic ethanol production in 2004. (Or the output of four 40-million-gallon ethanol plants, the typical size for farmer-owned plants in Iowa.) Of that 160 million gallons, 86 million gallons came from Brazil, 39 million from Jamaica, 25 million from Costa Rica, and 6 million from El Salvador. Looking more closely at those Brazilian ethanol imports, our government trade statistics show an average FOB (Brazilian port) value of $0.87 per gallon. The average CIF (delivered to U.S. port) value was about $1.01 per gallon. That 14 cents difference is ocean freight from Brazil to the U.S. The standard U.S. import tariff on ethanol is otherwise a 2.5 percent duty, plus 54 cents per gallon.
It looks to me like that is equal to a 55% import duty on Brazilian ethanol. My question is why don't we impose that much duty on a new Toyota or Volkswagen being imported into this country. That would include all the imported parts to assemble a Toyota, Honda, Nissan, BMW etc. Why are we protecting the Iowa farmers and not the Michigan auto workers? That would make the price of a new loaded Toyota Camry Hybrid $49,022. The Japanese do that to US.
I think fraudulent is the best term to describe the E85 scam at this time.
I don't know whether or not E85 will ultimately gain traction, but I certainly don't see a scam in play.
Subsidies and tax credits are typical tools that the US, state and local governments use to stimulate action and get things done. Abroad, you may find a tendency to impose top-down legislation or to use tax increases to achieve similar results, but since "tax" is a four-letter word in American politics (whether it's "taxx" or "taax", I'm not quite sure, but it has four letters in there somewhere), the governments here opt to use financial carrots (breaks and credits), rather than sticks (tax increases.)
So, let's say you're The Government, and your goal is to get more ethanol cars on the road and to reduce the use of imported oil. Since you don't have any supplies of the cars or the fuel, and since taxes are evil and ugly, and imposing overly draconian mandates is politically difficult, what do you do?
-First, you give the automakers an incentive to build some FFV cars, so you have a group of consumers who can eventually use the stuff
-Secondly, you create a subsidy to stimulate domestic production of the fuel
-Thirdly, you impose a relatively benign mandate to use it that drives up prices, which will encourage new suppliers to enter the market.
What did we end up with?
(1) CAFE credits motivating the creation of some FFV (2) Subsidies to producers, combined with import quotas (3) The E10 mandate
The goals are obvious: to create a base of consumers who can use it, to encourage producers to make more of it, and to find a mandated use for it to ensure a certain foundation for demand and to put it into the distribution chain. The E10 mandate gets the fuel into general circulation, yet is mild enough from a producer's standpoint as to make it relatively palatable and painless, a much easier pill to swallow than anything more drastic, i.e. forcing the production and distribution of E85 to every fuel station in the country.
This is a very typical way that things get done in the US. If we acted like Europeans, this stuff would have been combined with a gas tax increase to make ethanol far more attractive, but since we don't do things that way, don't count on it happening anytime soon. The US approach focuses on motivating the supplier to create the pull, although it would probably be more effective to use taxation to create a push.
Until I see, at the very least, an effort to place E85 fuel pumps in a usable manner this is a scam. One public station in all of California with zero, I repeat zero, plans available for any future expansion to Joe Public. This borders on criminality, in my opinion. E85 should be called the invisible fuel!
E85 is far off from gaining national distribution, given that the total production of ethanol is but a few percent of gasoline consumption.
A more likely scenario is the eventual near-complete adoption of E10, with E85 used in certain markets and expanding slowly as ethanol production increases and research into alternative biomasses yields some benefit. It will take a long time, if it ends up working at all.
Not sure how you'd impose E85 distribution on service stations, that's not the American way of doing things. There will need to sufficient demand, which first requires getting the vehicles into the hands of the driving public, something that will take awhile.
There are millions of E85 capable vehicles on the road today. For me to buy into the E85 concept I would need to see a plan. I have neither read about or seen a plan in any format. I have heard a great deal of wishful thinking though. In the "interim", someone is making lots of money. I do not know if it's ADM, politicians or whomever. We are getting taken until someone puts together a comprehensive plan of action with timelines and structure. The more I think about it the angrier I get. It doesn't specifically have to be E85 or Diesel or hybrid technologies. The market will dictate what becomes acceptable. Take away the subsidies or treat all equally. At least that way we could get a clearer picture of what is real of not.
Which subsidies do you want to remove? The mortgage interest deduction on your house? The charitable deductions that permit you to write off your donations?
The tax code is full of subsidies of all types, across the spectrum. It is intended to motivate all sorts of behavior, from the creation of biofuels to charitable donations to homeownership to childbearing.
Biofuels are but a drop in the bucket -- if anything, the government could do vastly more than it is doing, if only there was the political will to do it. As it stands now, they provide very little in the way of help, i.e. a break on CAFE that, as far as I can tell, doesn't directly cost the treasury a single penny.
The American "free market" is actually filled with various incentives, credits and benefits that are intended to motivate some behaviors while discouraging others. To fixate on biofuel stuff out of context is to miss how the US tends to get things done in many sectors, many of which you've never thought twice about.
There's a lot of posts on how the cost of ethanol will go down significantly over time due to economies of scale. ADM is hardly a Mom & Pop operation. I seriously doubt they can grow, harvest, distill corn much more efficiently than they currently are.
In the 7 - 7:30 half hour of the Today show this morning, Bill Ford spoke to us about how Ford is leading the way to alternative fuel consumption via the offering of the first hybrids and how next year Ford will have the capacity to produce 250,000 FFV vehicles -- that will use fuel grown right in America's heartland (cut to bushels of corn video.)
In fact, he says, "some number or percentage here," Ford has the most vehicles of any domestic mfgr that get 30 or more MPG's [sic].
Now, I am admitting I cannot remember every word, but I am certain the spirit of what was presented has been accurately represented. Without the benefit of this forum, I would conclude, due to the careful juxtapositioning of the various elements of the almost info-mercial, that E85 (which is mentioned by name), is currently "available" (for/to most Ford buyers) and that FFV's will join the other Ford vehicles that have notable MPG capabilities above 30MPG.
Again, this is an interpretation, but I must conclude that the entire pitch is to demonstrate Ford's attention, commitment and understanding that we (Americans) must use less fossil fuel and that Ford has its act together and is leading the way among US mfgrs in this regard.
What information that can be cobbled together belies the "tone" if not the actual words of the spot.
Yep, they probably do have the capacity to build 250,000 FFV's -- what will they be? Thus far, the FFV's you can find here in "the heartland" include fairly large pick up trucks, SUV's (even Enterprise rents FFV Tahoes -- and they're as big as a house!) and although I've not seen them, I have heard that there have been some Tauruses that are FFV capable.
Perhaps the Taurus model, running on gas, not E85, exceeds 30 MPG's -- will someone here, who knows, or who can point where to look this stuff up, verify this or at least "point." Besides, we have 9 E85 filling stations and 1 almost ready to come on line -- for the ENTIRE STATE of Ohio. Not likely, I could buy one and actually fill it up and make it to the next E85 station.
Moreover, the end of the "prudent" E85 statement is immediately followed by the claim (as if the FFV's are to be included in the mix) that Ford's company offers more 30MPG vehicles than anyone else, as if FFV's offered are inherently high mileage vehicles (which, thus far, they have not tended toward being.)
I cannot imagine that the copy writers, lawyers and producers were sloppy -- indeed, I suspect each statement of fact made by Mr. Ford is accurate as a stand alone data point.
But the weaving and linking and juxtapostioning of these data points seems to paint the picture that E85 attains great "gas" mileage in Ford's FFV's, that buying E85 is darn near patriotic (we'll grow our own fuel -- and to hell with "ferrin' oil") and that you can (according to the visuals) pull into a filling station and "fill 'er up" with E85.
Also, isn't the capability to produce 250,000 FFV's sort of like when Congress appropriates money but does not spend it? Sure I can build a quarter of a million cars (I guess if there were customers clamoring for them) but will I. Sure I appropriated billions for a purpose, but if I don't actually spend the money, the effect is nil.
While I assume the spot was truthful, it was spun so much that it literally, without the benefit of reading this forum and several (many) articles written by "experts" and more casual experts (like Bedard in Car and Driver) would make me want to go out and buy an FFV to save America from the ravages of evil foreign oil, and save me a ton of money in the bargain.
Now, this spot, to me at least, does smack of being disingenuous. :confuse:
Moreover, the end of the "prudent" E85 statement is immediately followed by the claim (as if the FFV's are to be included in the mix) that Ford's company offers more 30MPG vehicles than anyone else, as if FFV's offered are inherently high mileage vehicles (which, thus far, they have not tended toward being.)
Hog wash! Hog wash I say. There are only two FFV that get over 30MPG on the highway and then only using pure gas, and they ain't Fords. The best FFV gets 24 MPG highway using E85 thats 22.5% less than using regular gas (31 MPG highway). The Taurus loses 26% mileage using E85 (20MPG vs 27 MPG). Most FFV's are gas guzzlers, if they are really serious they should be making a FFV Focus.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"We think morally it is inappropriate because what we are doing here is using food and turning it into fuel. If you look at Africa, there are still countries that have a lack of food, people are starving, and because we are more wealthy, we use food and turn it into fuel. This is not what we would like to see. But sometimes economics force you to do it." Eric G Holthusen, Shell’s Fuels Technology Manager www.planetark.com, 7 July This is from the same company that lied about their oil reserves a few years ago. And notice that the guy says economics forced them to do it. Who is this guy Economics and why is he holding a gun to their head? “There is only one defensible argument against alcohol-gasoline mixes. It holds that it is immoral, in a world in which millions face malnutrition or starvation, to use corn to propel the gas-guzzling SUVs of the wealthiest, most obese and most wasteful people on Earth. That is a truth. Here is an additional truth: The assumption that corn grown for use in ethanol would otherwise be grown to feed starving Africans is poorly founded. The typical farmer plans and plants for sale and profit, not for charity.” The Fayetteville (NC) Observer Corn used to create ethanol is generally used to feed livestock. The ethanol process concentrates the ingredients (protein, minerals, fat and fiber) creating DDGS which is feed to cattle. The 100 MGY plant going up near Jamestown, ND will produce enough DDGS for 60,000 dairy cattle. The number of dairy cattle in ND is about 39,000. The people involved are working on creating additional markets for the DDGS. The myth that E85 will somehow remove food from hungry mouths is just that – a myth.
The recent news item in ENN shows that ethanol and E85 will continue to gain market share.
The goals are obvious: to create a base of consumers who can use it, to encourage producers to make more of it, and to find a mandated use for it to ensure a certain foundation for demand and to put it into the distribution chain
No that is not the goal. The goal is to reduce our dependence on foreign oil. The government may very well suceed in getting these FFVs on the road and increasing ethanol production but if we are still importing more oil then what was the point?
It is typical for people in our society to fixate so much on a method for attaining a goal that it now becomes the goal. Whether or not it achieves the original desired results is irrelevant. This country is constantly declaring a war on something, whether it be drugs, poverty, crime, illiteracy, etc.. You then ask a politician how this war on drugs is going? He will cite things like we have increased law enforcement by 10%; we have increased prison sentences for drug crimes by 50%; we have declared schools to be drug free zones. You cut him off and say, "that's not what I asked. I want to know if drug use is down"? If that answer to that is no then all this politician has told you is that they have wasted a lot of resources on an ineffective solution and he doesn't even realize that's a problem.
Ethanol is not now and will never be a prudent use of our resources for attaining the goal of reducing oil dependence.
Do automakers get a CAFE break for selling these low mpg FFV trucks in California? I'm pretty sure the answer to that is yes, which more than anything points out the lunacy of the government's approach. They have created a system that increases gasoline consumption for the sake of getting FFVs on the road. Brilliant!!
A big plus for ethanol is that it can be distiled from cellulose. Waste plant fibre and inedible plant parts such as stalks and husks can be used to produce ethanol.
It seems more sound in the long term to make ethanol from waste fiber than from edible grains.
This article from today's High Plains Journal gives some details.
Despite your doubts, there are a lot of things in the works regarding efficient growing, harvesting and distilling of corn. 1. They are working on hybrid crops. 2. They continue to increase corn yields per acre 1934 - 18.7 1964 - 62.9 1994 - 138.6 2004 - 160.4 Source - World of Corn 2005 3. Scientists are working on nitrogen fixation for non-legume crops (corn for example) which could reduce the need for inorganic fertilizers. That would lower the cost. http://www.eurekalert.org/pub_releases/2006-06/babs-nrm062606.php 4. Car companies continue to reduce their cost. Many have been around over 100 years. Neither technological progress or increases in efficiency stop when a company or industry reaches a certain size or age. 5. GPS and computers are also having a big impact on farm efficiency.
Yes but have you noticed that the rate of increase is going down. Between 34 and 64 it increased 336%, but only 220% between 64 and 94. In the 10 years since 94 it has increased only 15% (55% over 30 years if the 15% per ten years holds out). You see there is a limit to how much corn a piece of land can produce, each year its getting more and more difficult to increase that yield.
Car companies continue to reduce their cost. Many have been around over 100 years. Neither technological progress or increases in efficiency stop when a company or industry reaches a certain size or age.
No but there is a law of diminishing returns which state that you get to the point where each unit of improvement gets harder and more costlier to archive.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"Will anyone want to spend millions and probably billions to ramp up this use of other materials to make ethanol."
Yes, yes, yes and yes Are you forgetting how much money is being spent in developing the oil sands in Canada and deep water drilling? If there is money to be made people will take the risk.
"Would you invest big bucks in a venture that could be worthless if oil prices drop as they will."
Oil prices may drop in the short term. The long term trend is clear. Oil prices will rise. Investments are made on long term projections not on the price of oil this fall.
"Nobody would believe when I said gas would get below $2.50 per gallon by fall. It has hit $2.12 in KY already."
"OPEC is not going to let some upstart companies squeeze their money supply."
OPEC has little control over high prices. They are limited on how much they can increase capacity. OPEC has more control if prices drop. They can cut back production to keep prices high. OPEC also has little control over refining capacity. They might be able to produce another 1 or 2 MBD, but, if the US and other countries do not have the capacity to treat that type of oil then prices for gasoline will rise.
The roadmap responds directly to the goal recently announced by Secretary of Energy Samuel W. Bodman of displacing 30 percent of 2004 transportation fuel consumption with biofuels by 2030.
The article gives NO idea of how they are going to produce ethanol from waste biomass. It is just an idea that it will be possible some time in the future. In the meantime we are building ethanol plants at the governments (our tax dollars) that are not part of any long range ethanol plan. The people that are pushing Corn Ethanol know it is not an energy positive alternative fuel. It is a way to get more money out of you and I for each gallon of gas we use, without adding additional taxes at the pump.
Has there been any negative campaign by the oil companies concerning ethanol. I have not seen them. You know why? because it is not cutting into their bottom line. In fact when you consider the diesel it takes to transport that crap across the nation, it is a MONEY maker for the oil companies. Of course the big 3 automakers are jumping on ethanol. It gives them a way to disguise their gas guzzlers without spending any money on research. They have had the technology since the 1970s. The last time we got the royal ethanol shaft.
Most of us don't recognize subsidies that benefit us as a special interest subsidy which is in effect a transfer of wealth to us from others, the home mortgage interest deduction being a big one. Likewise the "homestead" exemption from local property taxes. These exemptions shift the tax burden from homeowners to renters.
When a new subsidy appears more will people see it for what it is, but we as a country have a reason for participating in the hype about biofuels--we want to pretend that we are doing something to reduce our energy consumption, but not really do anything.
The old saw that you can't cheat an honest man applies here. We are not being honest when we tout biofuels as an "environmentally friendly" means of maintaining our energy consumptive lifestyle. President Bush was too limited in his last SOTUS when he said we were addicted to oil. We are addicted to energy consumption in all forms, but like all addicts we won't be honest with ourselves. So we participate with our political leadership and in letting GM make false claims about the benefits of flex fuel vehicles and give agribusiness even more subsidies to produce fuel ethanol which is of no proportional benefit to the efforts and inputs required to produce it.
Yes, yes, yes and yes Are you forgetting how much money is being spent in developing the oil sands in Canada and deep water drilling? If there is money to be made people will take the risk.
If that is true why weren't they building ethanol plants prior to this latest push? The incentives have been in place for 30 years. In fact the ethanol subsidy was higher in the 1980s when the ethanol market crumbled. Did they bring those 90 ethanol plants back on line that were shut down in 1985. 90 ethanol plants that you and I paid for in the form of loan guarantees. I doubt they are anything but rusted eyesores in towns throughout the Midwest.
As far as tar sands. I guess the Canadians are making money at that venture. I have no idea if it is subsidized by the Queen. Deep water drilling is expensive but very profitable. We the people get tax revenue from every barrel of oil produced in this country. How much tax revenue are we getting from ethanol production?
Only one company has built a plant that can produce ethanol from the likes of switchgrass. So far they have not gotten any investors to build the 350 million dollar plant in Idaho. No one in Canada wants to cough up the money there either. I don't know if they can make any money with their process.
Does anyone know of any company other than Iogen that has demonstrated it can make ethanol from waste biomass?
WILMINGTON, Del. - One way to wean America from its addiction to foreign oil might well lie in the muddy solution swirling about a glass container on top of a DuPont Co. laboratory bench.
Inside the liter-size vessel, a desert-loving bacterium is making motor fuel. The organism, which normally lives on the agave plant of tequila fame, is munching on the chopped-up leaves and stalk of a plant, and excreting a dilute form of ethanol, the gasoline substitute normally made from corn kernels in the U.S.
The tiny organism -- and others being engineered in competing labs around the country -- could hold the keys to a new U.S. fuel source: cellulosic ethanol, which can be made from crop residues, wood chips, switchgrass and even municipal garbage.
The effort to make cellulosic ethanol into a full-blown power source to run America's cars is embryonic, and its outcome uncertain. But the fuel has two big things going for it: High oil prices and backing from the Bush administration, which sees it as a potentially important part of future energy supplies and is putting up money to help launch the first "biorefineries" to make it. Adherents think it could reduce U.S. dependence on imported oil, cut emissions that cause global warming and shore up the nation's rural economy. Already, the race is attracting big names, with the likes of Archer-Daniels-Midland Co., Royal Dutch Shell Group and Goldman Sachs Group Inc., investing time and seed money.
In the U.S., ethanol for fuel is typically made from corn. But growing corn gobbles up a lot of power in the form of everything from fertilizer to pesticides. The economics of cellulosic ethanol, made essentially from waste, could be different. With the booming economies of China and India helping increase the world's appetite for petroleum faster than new sources of fossil fuel can be found, economists figure there will be a need for tens of billions of gallons of alternative fuels within just a few decades.
"Suddenly, there is a race out there to develop a new source of energy," says Thomas Connelly, DuPont's chief innovation officer.
Until recently, the idea of squeezing ethanol from farm waste and other sources was barely clinging to life in the recesses of university campuses and federal labs. Few in the private sector seriously pursued the idea for the simple reason that it's far easier to make ethanol from corn. The microorganisms good at making ethanol prefer eating the sugar in corn kernels.
Getting the bugs to dine as heartily on corn stalks and wheat straw is tough. It requires huge investments in research to find enzymes that can break down the cellulose into sugars and microorganisms that eat the sugars. The search is leading scientists to explore the dung of elephants and the guts of cows. Genetic engineers are also modifying the bugs they find to do the job more efficiently.
To help prove that these problems can be overcome on a commercial scale, the Energy Department is staging a competition for its backing to build the nation's first three plants. The department, which has $160 million to spend on the contest, is requiring each candidate to have a pilot plant showing a process that can be successful once it is scaled up.
At least 30 companies are in the running for the aid, industry officials say. One player with big backers is Iogen Corp., a privately held Ottawa-based biotech company that has patented enzymes that can extract the sugars from wheat and barley straw. It has proposed building a commercial plant in southeastern Idaho, where it already has contracts with farmers to deliver the raw materials.
Flex Fuel Fuzzy Math By Eric Peters Published 6/28/2006 12:06:42 AM
Under the cover of promoting "renewable" energy, the federal government has put into place a loophole in its Corporate Average Fuel Efficiency (CAFE) requirements that distorts the truth about a vehicle's actual mileage capability if it's a vehicle made to run on both gasoline or a gasoline-ethanol blend known as E85. Such "flex fuel" vehicles are credited with much higher miles-per-gallon capability than they actually get -- on the theory that when they burn E85 they are using less gas. Thus, a full-size, V-8 powered SUV like the GMC Yukon is rated at 33 mpg for CAFE purposes -- when in fact it only gets 15 mpg in city driving and 20 mpg on the highway. (It actually gets less when running on E85, since alcohol-based fuel contains less energy per gallon equivalent than straight gasoline.)
As a result of this smarmy loophole, GM, Ford, and other automakers have been given a strong incentive to build large numbers of E85-burning "flex-fuel" vehicles -- vehicles that might not make the CAFE cut otherwise and thus be less economical to produce. (Failing to meet CAFE standards results in fines and "gas guzzler" surcharges, etc.)
But the idea is to create market demand for the heavily-subsidized ethanol industry -- not produce more fuel-efficient vehicles. According to a New York Times piece by Thomas Friedman, the E85/CAFE loophole "increased U.S. oil consumption by 80,000 barrels per day in 2005 alone." GM has built some 2 million flex-fuel vehicles -- many of them large trucks and SUVs that would otherwise be subject to gas-guzzler fines, absent the clever accounting tricks.
I agree. And yes, I noticed that the rate decreased. I posted the dates on purpose. The number in 94 was actually better than 95 yield. My guess is that weather or some other factors were favorable.
My main point was to show that improvements continue to be made. The same can be said of oil exploration and the energy field in general.
Brazil is about twice as efficient as the US in the number of energy units produced per unit of input
That is exactly the reason they have not taken off the tariff. It would kill the Corn ethanol business. Why would anyone buy corn ethanol when they can get ethanol from Brazil or all the other sugar producing countries for less than half the price? I have read that sugar cane is as much as 7 times more energy positive than ethanol from corn. The big picture is this is political paybacks for the Midwest. It has nothing to do with our energy needs.
Just remember that tax write offs and subsidies are two different animals.
Then by that definition, as far as I can tell, there is no ethanol "subsidy", and people in this thread should stop using that terminology to describe it.
The ethanol "subsidy" is actually a $0.51 per gallon tax credit paid to the firms that blend it. It's not a check paid by the Feds to the producers, but a tax benefit that they can use to reduce their income taxes (or, I assume, that they can offer to investors who can purchase them and profit on the effective yield generated by the use of those tax credits.)
Tax credits are used to motivate all sorts of programs in the US, because they appease both sides of the Congress yet don't involve a direct transfer payment. It's effectively equivalent to an mega-deduction of sorts, because the credit can be used to reduce a tax liability dollar-for-dollar.
In principle, that's not much different than punishing renters to the benefit of homeowners and banks by allowing the homeowner to deduct his interest and the banker to gain more business generated by higher loan production, while the renter gets stuck with a payment that can't be deducted at all. The obvious goal is to encourage renters to buy, and to keep the banking and lending system moving along, even if the landlords and tenants are both somewhat harmed by it. That's how the "free market" works here.
Tax write-offs, tax credits and subsidies are all entirely different. If you were to itemize your tax return you would know that.
I will ask again has the ethanol industry paid any income taxes? Or have they been able to write every thing off. That cannot be said of the oil industry. We (the US Government) get well head tax prior to the income tax we get from oil profits. Subsidies are pure welfare. Write-offs are legitimate expenses incurred in the process of doing business. Tax credits are little gifts we give out to folks that play the game as our government would like us to play. Such as the hybrid tax credit. Although many of us will not qualify because of something called Alternative Minimum Tax. You know tax the middle class and give it to the rich & poor.
My main point was to show that improvements continue to be made.
My point is that while improvements are being made its getting harder to make those improvements and the improvements are getting smaller. There is a point of maximum potential where any improvements would be extremely small and very expensive and not worth the time, effort and cost.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Then by that definition, as far as I can tell, there is no ethanol "subsidy", and people in this thread should stop using that terminology to describe it.
Huh? The ethanol subsidy is a subsidy not a tax write off.
The ethanol "subsidy" is actually a $0.51 per gallon tax credit paid to the firms that blend it.
Tax credits and tax deductions are two different animals.
Once you can really show that you know this stuff then we can talk.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The ethanol subsidy is a subsidy not a tax write off.
I'm not seeing an ethanol subsidy, using the strict definition of "subsidy" that you are using,
Ethanol blenders are provided with a per-unit tax credit. According to you, tax credits aren't subsidies. So if that's the case, don't refer to them as a subsidy.
(In the big picture, deductions and credits are indirect forms of subsidy, as the taxes not collected as a result have to come from somewhere else. But if that's the case, let's remember all the credits and deductions that are floating around the system, rather than one specific one that seems no worse than the others, given the goals behind it.)
I would agree that Ford is not sending a clear message. I am a bit ticked that the new Ford Fusion is not a FFV. Toyota is investing thousands of dollars in each hybrid. But Ford, they are still all talk and no action. They are afraid to invest $150 a car. "Ford Motor Company estimates the incremental cost of a FFV vehicle at $100 to $150 per unit." http://www.e2.org/ext/jsp/controller?docId=9684§ion=stateofunion
"Now, this spot, to me at least, does smack of being disingenuous."
Yes but then we are also talking about marketing, where all the steaks sizzle and all the men/women are perfect.
Speaking of marketing, the basic question we are all trying to answer about E85 boils down to where the product is in the adoption process. I would suggest people dust off their Principles of Marketing text book and go to the section on "New-Product Adoption".
E85 is a new product. We are still in the early stages of product adoption. The people that are buying the product are innovators and early adopters. The skeptics are likely in the late majority or laggard group. Don't take that as an insult. It just may reflect how you feel about this particular product. You might be an early adopter when it comes to another type of product.
I consider myself to be in the early majority group. As E85 stations become more numerous and cars get built that take advantage of E85, like the Bio Saab 9-5, I plan on giving it a look see.
E85 is far from new. Heck, back in the late 90's absolutely *ALL* models of Ford Ranger were FFV, designed to use E85. When I first got my Prius, people were complaining about owning a E85 capable vehicle for years already but still no E85 outside of the metro area to fill the tank with.
That hardware & fuel technology has been around for quite some time now. So there really is no excuse why production capacity is only a pitiful 250,000 per year. Geez! Even "full" hybrid production is higher than that.
"I'm not seeing an ethanol subsidy, using the strict definition of "subsidy" that you are using"...You are NOT using my definition.
Then you need to address this to Gagrice, who keeps referring to the ethanol tax credit as a "subsidy".
I simply spelled out what it was, so that people didn't falsely presume that Uncle was handing over big checks to ethanol blenders, is not the case.
A tax credit and a write off are two different things.
In the big picture, they are similar concepts. The difference lays in the proportion of savings to the taxpayer. (A deduction reduces taxes by the expense multiplied by the tax bracket, whereas a credit reduces the payable taxes by the full amount of the credit.)
The end result for both is the same: lower taxes. Obviously, the government uses these selectively to reward some behaviors and to deter others. These are used all over the board, for all kinds of things, and are surely not limited to ethanol.
I would agree that Ford is not sending a clear message.
If Ford is really serious why don't they make all their cars FFV's. The Escape Hybrid if it could use E85 would still get better city mileage using E85 than a regular Escape using regular gas.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Comments
o Prices have risen these past three years, despite the global market tending toward oversupply, as heightened geopolitical uncertainties, a general commodity market bull run, and refinery bottlenecks have prevailed.
o When the underlying market fundamentals wrestle back control, prices will fall as the speculative froth is unwound.
The link to the full text I posted yesterday, I would have imagined would have, in the best Monty Python sense of the word, sparked at least contradiction -- but instead the analysis has enjoyed a roaring silence.
Further, in the same analysis:
Prices have more than tripled since late 2001, while the global market has somewhat surprisingly tended toward oversupply. Between 2001 and 2005 (inclusive), only one year has carried a global deficit, 2002, with an average annual deficit of 730,000 barrels per day (b/d) recorded. The others—2001, 2003, 2004, and 2005—carried overall global surpluses, of approximately 100,000 b/d, 450,000 b/d, 460,000 b/d and 330,000 b/d, respectively.
The global oil supply has been in a condition of overall excess for some three years, as rapid supply growth has more than made up for the sharp increase in demand.
With only a little bit of sarcasm, I say, ". . .really, it's been in all the papers!"
Finally:
"Despite such bullish market circumstances, Moody’s Economy.com remains essentially bearish on oil, as we continue to believe that a large fraction of the current oil price (above US$70) is speculative froth. As the market increasingly realises that current oil supplies remain relatively plentiful, with the market tending toward a global surplus—with forecasts of more to come—prices will correct on the downside.
Moody’s Economy.com 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 price rally begin to feed through into heightened capacity growth.
Crude oil prices are forecast to fall, as the global market increasingly realises that the recent past was not in fact undersupplied."
From a consumer's point of view this seems to be encouraging for the pump price of dinoline and discouraging for the pump price of ethanol. This would tend to have an effect, yes?, on the enthusiasm to invest in refineries, so to speak, that will find it increasingly difficult to compete on price or availability with the dino stuff.
Is too, is not. . .etc. :shades:
The ethanol subsidy was 40 cents in 1978. We built 163 ethanol plants with tax dollar guarantees during the early 1980s. We kicked up the subsidy to 60 cents in 1984 to help the sinking ethanol ship. By 1985 55% of the ethanol plants were shut down. It did not fly 20 years ago, what will make the difference this time? If ethanol is so great why not take all subsidies and tariffs off and let the market decide. Because the mega ag companies are paying big bucks to our Congress to keep the scam alive.
And, this too, no kidding, "is in all the papers." :surprise:
My points, of late, have been encouraged by reading and digging and googling and researching the subject of known oil supplies and our abilities and willingness to get at it.
We're heading for a glut or at least a plentiful oversupply if we stay the current course. And, my best guess says we certainly will at least for the rest of this decade.
This "rubber band" of supply is nowhere near at the limits of its elasticity.
Sharply falling oil prices would certainly deter market interest in biofuels, no doubt about that. I would also not be surprised if oil prices declined somewhat from current levels.
But oil at $50 per barrel, adjusted upward for the CPI, is certainly high enough to make alternatives economically viable. And unless you are expecting the PRC and other nations to sharply contract, I can't see how anyone could expect a sharp downturn in pricing.
Again, a key difference between the seventies' oil crunch and today's situation is that the earlier OPEC cartel was entirely artificial, so it was vulnerable to failure. (Greed and the free market doom most cartels to fail over the long run, and OPEC proved to be no exception.) Here, oil demand is growing dramatically and suppliers don't appear to be manipulating pricing, so the circumstances are quite different, and pricing can't be expected to plummet without fundamental changes in demand that don't strike me as likely. No one knows for sure, but I'd bet that the days of $10 oil are long gone.
Because oil prices are not likely to collapse, as we don't have an OPEC cartel driving the current price increases. Very different circumstances to the late seventies, the price drivers are completely different.
What I don't like about the CORN ethanol process is it is so far removed from reality with its subsidies and tariffs that it will just go away when and if a better source of ethanol arrives. My reading tells me the plants built to process corn into ethanol will not be of any value in processing the likes of Switchgrass or wood chips. It is an entirely different process from beginning to end. So we throw all this tax money to ADM to build Corn ethanol plants, then we give more to build biomass plants to process whatever. We know that Corn to ethanol is marginal in what you get for what you put in. Why not just spend the money on getting a viable alternative fuel to start with?
Maybe in your dreams, but unless suddenly everything becomes far more fuel efficent (like twice as efficent) you will never see $30 a barrel oil again.
We know that Corn to ethanol is marginal in what you get for what you put in. Why not just spend the money on getting a viable alternative fuel to start with?
And the Lords people said AMEN!
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Now that is what I would like to believe.
What I cannot vet, or cannot vet vocationally is, this:
"As the market increasingly realises that current oil supplies remain relatively plentiful, with the market tending toward a global surplus—with forecasts of more to come—prices will correct on the downside. "
Nor can I vet this:
"For now, we return to Moody’s Economy.com’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."
We will have to wait until 2007 and 2008 to determine the accuracy of this forecast.
Not even this analysis suggests $10 per bbl oil. Yet, the Rand study proffers $20/bbl oil (in 2005 dollars) is possible based on the initial production of "cooked shale" from the Colorado/Wyoming reserves.
Oil demand may indeed be growing dramatically, but all the printed reports, opinions, commentary and analysis I have run across these past few weeks indicate that supplies are MORE THAN keeping up with demand with, as the man said, "forecasts of more to come."
Now, if diesel makes it in such circumstances (assuming you lend credence to the author's integrity and capability), it will be because diesel will offer "hot cars" in cool packages that sip fuel (even if it is cheaper then than it is now.)
With a price of a bbl at $40, rather than $75, there will be a dramatic decrease in the price per gallon -- for if there are no shortages and prices are that low (unless taxes are raised beyond the dreams of unrestrained governmental avarice), there will be yet another hearing and this time the oil companies will not find any slight of hand that will justify high pump prices with a fall in the per bbl price approaching 50% (and no, I am NOT suggesting that gas will in lock step fall 50% in price at the pump.)
The current ethanol dole and perhaps the ethanol scam as it appears to be to some, will not survive as it currently stands -- especially with its ability to provide only about 70% of the MPG of gasoline.
I think fraudulent is the best term to describe the E85 scam at this time.
That would put pressure on US ethanol producers to retain less of the $0.51/gallon subsidy because of competition from imports.
Does this make sense?
Import quotas increase prices by design.
If there is sufficient production or capacity for production outside the US to create an export market to the US, then yes, prices would almost certainly decline.
So yes, you have made perfect sense. However, this might slow the growth of domestic production, so it may not help in achieving the government's objective of encouraging domestic sources to get into the business.
That would be a good start. It would put the pressure on ADM and Verasun to lower prices or get out of the business. Right today they have a license to steal and we are the ones they are stealing from. Can Corn ethanol compete with $1.01 per gallon delivered to a US Port.
According to U.S. International Trade Commission statistics, we imported about 160 million gallons of fuel ethanol last year. 160 million gallons represents about 5 percent of total domestic ethanol production in 2004. (Or the output of four 40-million-gallon ethanol plants, the typical size for farmer-owned plants in Iowa.) Of that 160 million gallons, 86 million gallons came from Brazil, 39 million from Jamaica, 25 million from Costa Rica, and 6 million from El Salvador. Looking more closely at those Brazilian ethanol imports, our government trade statistics show an average FOB (Brazilian port) value of $0.87 per gallon. The average CIF (delivered to U.S. port) value was about $1.01 per gallon. That 14 cents difference is ocean freight from Brazil to the U.S. The standard U.S. import tariff on ethanol is otherwise a 2.5 percent duty, plus 54 cents per gallon.
Iowa Farm Bureau's take on Imported Ethanol
It looks to me like that is equal to a 55% import duty on Brazilian ethanol. My question is why don't we impose that much duty on a new Toyota or Volkswagen being imported into this country. That would include all the imported parts to assemble a Toyota, Honda, Nissan, BMW etc. Why are we protecting the Iowa farmers and not the Michigan auto workers? That would make the price of a new loaded Toyota Camry Hybrid $49,022. The Japanese do that to US.
I don't know whether or not E85 will ultimately gain traction, but I certainly don't see a scam in play.
Subsidies and tax credits are typical tools that the US, state and local governments use to stimulate action and get things done. Abroad, you may find a tendency to impose top-down legislation or to use tax increases to achieve similar results, but since "tax" is a four-letter word in American politics (whether it's "taxx" or "taax", I'm not quite sure, but it has four letters in there somewhere), the governments here opt to use financial carrots (breaks and credits), rather than sticks (tax increases.)
So, let's say you're The Government, and your goal is to get more ethanol cars on the road and to reduce the use of imported oil. Since you don't have any supplies of the cars or the fuel, and since taxes are evil and ugly, and imposing overly draconian mandates is politically difficult, what do you do?
-First, you give the automakers an incentive to build some FFV cars, so you have a group of consumers who can eventually use the stuff
-Secondly, you create a subsidy to stimulate domestic production of the fuel
-Thirdly, you impose a relatively benign mandate to use it that drives up prices, which will encourage new suppliers to enter the market.
What did we end up with?
(1) CAFE credits motivating the creation of some FFV
(2) Subsidies to producers, combined with import quotas
(3) The E10 mandate
The goals are obvious: to create a base of consumers who can use it, to encourage producers to make more of it, and to find a mandated use for it to ensure a certain foundation for demand and to put it into the distribution chain. The E10 mandate gets the fuel into general circulation, yet is mild enough from a producer's standpoint as to make it relatively palatable and painless, a much easier pill to swallow than anything more drastic, i.e. forcing the production and distribution of E85 to every fuel station in the country.
This is a very typical way that things get done in the US. If we acted like Europeans, this stuff would have been combined with a gas tax increase to make ethanol far more attractive, but since we don't do things that way, don't count on it happening anytime soon. The US approach focuses on motivating the supplier to create the pull, although it would probably be more effective to use taxation to create a push.
A more likely scenario is the eventual near-complete adoption of E10, with E85 used in certain markets and expanding slowly as ethanol production increases and research into alternative biomasses yields some benefit. It will take a long time, if it ends up working at all.
Not sure how you'd impose E85 distribution on service stations, that's not the American way of doing things. There will need to sufficient demand, which first requires getting the vehicles into the hands of the driving public, something that will take awhile.
Which subsidies do you want to remove? The mortgage interest deduction on your house? The charitable deductions that permit you to write off your donations?
The tax code is full of subsidies of all types, across the spectrum. It is intended to motivate all sorts of behavior, from the creation of biofuels to charitable donations to homeownership to childbearing.
Biofuels are but a drop in the bucket -- if anything, the government could do vastly more than it is doing, if only there was the political will to do it. As it stands now, they provide very little in the way of help, i.e. a break on CAFE that, as far as I can tell, doesn't directly cost the treasury a single penny.
The American "free market" is actually filled with various incentives, credits and benefits that are intended to motivate some behaviors while discouraging others. To fixate on biofuel stuff out of context is to miss how the US tends to get things done in many sectors, many of which you've never thought twice about.
In fact, he says, "some number or percentage here," Ford has the most vehicles of any domestic mfgr that get 30 or more MPG's [sic].
Now, I am admitting I cannot remember every word, but I am certain the spirit of what was presented has been accurately represented. Without the benefit of this forum, I would conclude, due to the careful juxtapositioning of the various elements of the almost info-mercial, that E85 (which is mentioned by name), is currently "available" (for/to most Ford buyers) and that FFV's will join the other Ford vehicles that have notable MPG capabilities above 30MPG.
Again, this is an interpretation, but I must conclude that the entire pitch is to demonstrate Ford's attention, commitment and understanding that we (Americans) must use less fossil fuel and that Ford has its act together and is leading the way among US mfgrs in this regard.
What information that can be cobbled together belies the "tone" if not the actual words of the spot.
Yep, they probably do have the capacity to build 250,000 FFV's -- what will they be? Thus far, the FFV's you can find here in "the heartland" include fairly large pick up trucks, SUV's (even Enterprise rents FFV Tahoes -- and they're as big as a house!) and although I've not seen them, I have heard that there have been some Tauruses that are FFV capable.
Perhaps the Taurus model, running on gas, not E85, exceeds 30 MPG's -- will someone here, who knows, or who can point where to look this stuff up, verify this or at least "point." Besides, we have 9 E85 filling stations and 1 almost ready to come on line -- for the ENTIRE STATE of Ohio. Not likely, I could buy one and actually fill it up and make it to the next E85 station.
Moreover, the end of the "prudent" E85 statement is immediately followed by the claim (as if the FFV's are to be included in the mix) that Ford's company offers more 30MPG vehicles than anyone else, as if FFV's offered are inherently high mileage vehicles (which, thus far, they have not tended toward being.)
I cannot imagine that the copy writers, lawyers and producers were sloppy -- indeed, I suspect each statement of fact made by Mr. Ford is accurate as a stand alone data point.
But the weaving and linking and juxtapostioning of these data points seems to paint the picture that E85 attains great "gas" mileage in Ford's FFV's, that buying E85 is darn near patriotic (we'll grow our own fuel -- and to hell with "ferrin' oil") and that you can (according to the visuals) pull into a filling station and "fill 'er up" with E85.
Also, isn't the capability to produce 250,000 FFV's sort of like when Congress appropriates money but does not spend it? Sure I can build a quarter of a million cars (I guess if there were customers clamoring for them) but will I. Sure I appropriated billions for a purpose, but if I don't actually spend the money, the effect is nil.
While I assume the spot was truthful, it was spun so much that it literally, without the benefit of reading this forum and several (many) articles written by "experts" and more casual experts (like Bedard in Car and Driver) would make me want to go out and buy an FFV to save America from the ravages of evil foreign oil, and save me a ton of money in the bargain.
Now, this spot, to me at least, does smack of being disingenuous. :confuse:
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Hog wash! Hog wash I say. There are only two FFV that get over 30MPG on the highway and then only using pure gas, and they ain't Fords. The best FFV gets 24 MPG highway using E85 thats 22.5% less than using regular gas (31 MPG highway). The Taurus loses 26% mileage using E85 (20MPG vs 27 MPG). Most FFV's are gas guzzlers, if they are really serious they should be making a FFV Focus.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
This is from the same company that lied about their oil reserves a few years ago. And notice that the guy says economics forced them to do it. Who is this guy Economics and why is he holding a gun to their head?
“There is only one defensible argument against alcohol-gasoline mixes. It holds that it is immoral, in a world in which millions face malnutrition or starvation, to use corn to propel the gas-guzzling SUVs of the wealthiest, most obese and most wasteful people on Earth.
That is a truth.
Here is an additional truth: The assumption that corn grown for use in ethanol would otherwise be grown to feed starving Africans is poorly founded. The typical farmer plans and plants for sale and profit, not for charity.” The Fayetteville (NC) Observer
Corn used to create ethanol is generally used to feed livestock. The ethanol process concentrates the ingredients (protein, minerals, fat and fiber) creating DDGS which is feed to cattle. The 100 MGY plant going up near Jamestown, ND will produce enough DDGS for 60,000 dairy cattle. The number of dairy cattle in ND is about 39,000. The people involved are working on creating additional markets for the DDGS.
The myth that E85 will somehow remove food from hungry mouths is just that – a myth.
The recent news item in ENN shows that ethanol and E85 will continue to gain market share.
http://enn.com/today.html?id=10809
DDGS (distillers dried grains with solubles
No that is not the goal. The goal is to reduce our dependence on foreign oil. The government may very well suceed in getting these FFVs on the road and increasing ethanol production but if we are still importing more oil then what was the point?
It is typical for people in our society to fixate so much on a method for attaining a goal that it now becomes the goal. Whether or not it achieves the original desired results is irrelevant. This country is constantly declaring a war on something, whether it be drugs, poverty, crime, illiteracy, etc.. You then ask a politician how this war on drugs is going? He will cite things like we have increased law enforcement by 10%; we have increased prison sentences for drug crimes by 50%; we have declared schools to be drug free zones. You cut him off and say, "that's not what I asked. I want to know if drug use is down"? If that answer to that is no then all this politician has told you is that they have wasted a lot of resources on an ineffective solution and he doesn't even realize that's a problem.
Ethanol is not now and will never be a prudent use of our resources for attaining the goal of reducing oil dependence.
Do automakers get a CAFE break for selling these low mpg FFV trucks in California? I'm pretty sure the answer to that is yes, which more than anything points out the lunacy of the government's approach. They have created a system that increases gasoline consumption for the sake of getting FFVs on the road. Brilliant!!
It seems more sound in the long term to make ethanol from waste fiber than from edible grains.
This article from today's High Plains Journal gives some details.
http://www.hpj.com/dtnnewstable.cfm?type=story&sid=17181
1. They are working on hybrid crops.
2. They continue to increase corn yields per acre
1934 - 18.7
1964 - 62.9
1994 - 138.6
2004 - 160.4
Source - World of Corn 2005
3. Scientists are working on nitrogen fixation for non-legume crops (corn for example) which could reduce the need for inorganic fertilizers. That would lower the cost.
http://www.eurekalert.org/pub_releases/2006-06/babs-nrm062606.php
4. Car companies continue to reduce their cost. Many have been around over 100 years. Neither technological progress or increases in efficiency stop when a company or industry reaches a certain size or age.
5. GPS and computers are also having a big impact on farm efficiency.
Yes but have you noticed that the rate of increase is going down. Between 34 and 64 it increased 336%, but only 220% between 64 and 94. In the 10 years since 94 it has increased only 15% (55% over 30 years if the 15% per ten years holds out). You see there is a limit to how much corn a piece of land can produce, each year its getting more and more difficult to increase that yield.
Car companies continue to reduce their cost. Many have been around over 100 years. Neither technological progress or increases in efficiency stop when a company or industry reaches a certain size or age.
No but there is a law of diminishing returns which state that you get to the point where each unit of improvement gets harder and more costlier to archive.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Yes, yes, yes and yes
"Would you invest big bucks in a venture that could be worthless if oil prices drop as they will."
Oil prices may drop in the short term. The long term trend is clear. Oil prices will rise. Investments are made on long term projections not on the price of oil this fall.
"Nobody would believe when I said gas would get below $2.50 per gallon by fall. It has hit $2.12 in KY already."
The $2.12 number seems to be way below most stations in KY.
http://www.fuelgaugereport.com/sbsavg.asp
Shows an average of $2.88 as of 7/7/06
"OPEC is not going to let some upstart companies squeeze their money supply."
OPEC has little control over high prices. They are limited on how much they can increase capacity. OPEC has more control if prices drop. They can cut back production to keep prices high. OPEC also has little control over refining capacity. They might be able to produce another 1 or 2 MBD, but, if the US and other countries do not have the capacity to treat that type of oil then prices for gasoline will rise.
The article gives NO idea of how they are going to produce ethanol from waste biomass. It is just an idea that it will be possible some time in the future. In the meantime we are building ethanol plants at the governments (our tax dollars) that are not part of any long range ethanol plan. The people that are pushing Corn Ethanol know it is not an energy positive alternative fuel. It is a way to get more money out of you and I for each gallon of gas we use, without adding additional taxes at the pump.
Has there been any negative campaign by the oil companies concerning ethanol. I have not seen them. You know why? because it is not cutting into their bottom line. In fact when you consider the diesel it takes to transport that crap across the nation, it is a MONEY maker for the oil companies. Of course the big 3 automakers are jumping on ethanol. It gives them a way to disguise their gas guzzlers without spending any money on research. They have had the technology since the 1970s. The last time we got the royal ethanol shaft.
When a new subsidy appears more will people see it for what it is, but we as a country have a reason for participating in the hype about biofuels--we want to pretend that we are doing something to reduce our energy consumption, but not really do anything.
The old saw that you can't cheat an honest man applies here. We are not being honest when we tout biofuels as an "environmentally friendly" means of maintaining our energy consumptive lifestyle. President Bush was too limited in his last SOTUS when he said we were addicted to oil. We are addicted to energy consumption in all forms, but like all addicts we won't be honest with ourselves. So we participate with our political leadership and in letting GM make false claims about the benefits of flex fuel vehicles and give agribusiness even more subsidies to produce fuel ethanol which is of no proportional benefit to the efforts and inputs required to produce it.
If that is true why weren't they building ethanol plants prior to this latest push? The incentives have been in place for 30 years. In fact the ethanol subsidy was higher in the 1980s when the ethanol market crumbled. Did they bring those 90 ethanol plants back on line that were shut down in 1985. 90 ethanol plants that you and I paid for in the form of loan guarantees. I doubt they are anything but rusted eyesores in towns throughout the Midwest.
As far as tar sands. I guess the Canadians are making money at that venture. I have no idea if it is subsidized by the Queen. Deep water drilling is expensive but very profitable. We the people get tax revenue from every barrel of oil produced in this country. How much tax revenue are we getting from ethanol production?
Does anyone know of any company other than Iogen that has demonstrated it can make ethanol from waste biomass?
http://www.iogen.ca/
Inside the liter-size vessel, a desert-loving bacterium is making motor fuel. The organism, which normally lives on the agave plant of tequila fame, is munching on the chopped-up leaves and stalk of a plant, and excreting a dilute form of ethanol, the gasoline substitute normally made from corn kernels in the U.S.
The tiny organism -- and others being engineered in competing labs around the country -- could hold the keys to a new U.S. fuel source: cellulosic ethanol, which can be made from crop residues, wood chips, switchgrass and even municipal garbage.
The effort to make cellulosic ethanol into a full-blown power source to run America's cars is embryonic, and its outcome uncertain. But the fuel has two big things going for it: High oil prices and backing from the Bush administration, which sees it as a potentially important part of future energy supplies and is putting up money to help launch the first "biorefineries" to make it. Adherents think it could reduce U.S. dependence on imported oil, cut emissions that cause global warming and shore up the nation's rural economy. Already, the race is attracting big names, with the likes of Archer-Daniels-Midland Co., Royal Dutch Shell Group and Goldman Sachs Group Inc., investing time and seed money.
In the U.S., ethanol for fuel is typically made from corn. But growing corn gobbles up a lot of power in the form of everything from fertilizer to pesticides. The economics of cellulosic ethanol, made essentially from waste, could be different. With the booming economies of China and India helping increase the world's appetite for petroleum faster than new sources of fossil fuel can be found, economists figure there will be a need for tens of billions of gallons of alternative fuels within just a few decades.
"Suddenly, there is a race out there to develop a new source of energy," says Thomas Connelly, DuPont's chief innovation officer.
Until recently, the idea of squeezing ethanol from farm waste and other sources was barely clinging to life in the recesses of university campuses and federal labs. Few in the private sector seriously pursued the idea for the simple reason that it's far easier to make ethanol from corn. The microorganisms good at making ethanol prefer eating the sugar in corn kernels.
Getting the bugs to dine as heartily on corn stalks and wheat straw is tough. It requires huge investments in research to find enzymes that can break down the cellulose into sugars and microorganisms that eat the sugars. The search is leading scientists to explore the dung of elephants and the guts of cows. Genetic engineers are also modifying the bugs they find to do the job more efficiently.
To help prove that these problems can be overcome on a commercial scale, the Energy Department is staging a competition for its backing to build the nation's first three plants. The department, which has $160 million to spend on the contest, is requiring each candidate to have a pilot plant showing a process that can be successful once it is scaled up.
At least 30 companies are in the running for the aid, industry officials say. One player with big backers is Iogen Corp., a privately held Ottawa-based biotech company that has patented enzymes that can extract the sugars from wheat and barley straw. It has proposed building a commercial plant in southeastern Idaho, where it already has contracts with farmers to deliver the raw materials.
Ethanol research
By Eric Peters
Published 6/28/2006 12:06:42 AM
Under the cover of promoting "renewable" energy, the federal government has put into place a loophole in its Corporate Average Fuel Efficiency (CAFE) requirements that distorts the truth about a vehicle's actual mileage capability if it's a vehicle made to run on both gasoline or a gasoline-ethanol blend known as E85. Such "flex fuel" vehicles are credited with much higher miles-per-gallon capability than they actually get -- on the theory that when they burn E85 they are using less gas. Thus, a full-size, V-8 powered SUV like the GMC Yukon is rated at 33 mpg for CAFE purposes -- when in fact it only gets 15 mpg in city driving and 20 mpg on the highway. (It actually gets less when running on E85, since alcohol-based fuel contains less energy per gallon equivalent than straight gasoline.)
As a result of this smarmy loophole, GM, Ford, and other automakers have been given a strong incentive to build large numbers of E85-burning "flex-fuel" vehicles -- vehicles that might not make the CAFE cut otherwise and thus be less economical to produce. (Failing to meet CAFE standards results in fines and "gas guzzler" surcharges, etc.)
But the idea is to create market demand for the heavily-subsidized ethanol industry -- not produce more fuel-efficient vehicles. According to a New York Times piece by Thomas Friedman, the E85/CAFE loophole "increased U.S. oil consumption by 80,000 barrels per day in 2005 alone." GM has built some 2 million flex-fuel vehicles -- many of them large trucks and SUVs that would otherwise be subject to gas-guzzler fines, absent the clever accounting tricks.
That is why taking off the import duty would greatly lower our ethanol price.
Brazil uses sugar cane as the base for ethanol.
http://www.planetark.org/dailynewsstory.cfm/newsid/34851/story.htm
There will be bumps and detours on the road to cellulose ethanol but I expect in another 5-10 years production will be on line at competitive prices.
My main point was to show that improvements continue to be made. The same can be said of oil exploration and the energy field in general.
That is exactly the reason they have not taken off the tariff. It would kill the Corn ethanol business. Why would anyone buy corn ethanol when they can get ethanol from Brazil or all the other sugar producing countries for less than half the price? I have read that sugar cane is as much as 7 times more energy positive than ethanol from corn. The big picture is this is political paybacks for the Midwest. It has nothing to do with our energy needs.
Then by that definition, as far as I can tell, there is no ethanol "subsidy", and people in this thread should stop using that terminology to describe it.
The ethanol "subsidy" is actually a $0.51 per gallon tax credit paid to the firms that blend it. It's not a check paid by the Feds to the producers, but a tax benefit that they can use to reduce their income taxes (or, I assume, that they can offer to investors who can purchase them and profit on the effective yield generated by the use of those tax credits.)
Tax credits are used to motivate all sorts of programs in the US, because they appease both sides of the Congress yet don't involve a direct transfer payment. It's effectively equivalent to an mega-deduction of sorts, because the credit can be used to reduce a tax liability dollar-for-dollar.
In principle, that's not much different than punishing renters to the benefit of homeowners and banks by allowing the homeowner to deduct his interest and the banker to gain more business generated by higher loan production, while the renter gets stuck with a payment that can't be deducted at all. The obvious goal is to encourage renters to buy, and to keep the banking and lending system moving along, even if the landlords and tenants are both somewhat harmed by it. That's how the "free market" works here.
I will ask again has the ethanol industry paid any income taxes? Or have they been able to write every thing off. That cannot be said of the oil industry. We (the US Government) get well head tax prior to the income tax we get from oil profits. Subsidies are pure welfare. Write-offs are legitimate expenses incurred in the process of doing business. Tax credits are little gifts we give out to folks that play the game as our government would like us to play. Such as the hybrid tax credit. Although many of us will not qualify because of something called Alternative Minimum Tax. You know tax the middle class and give it to the rich & poor.
Great. Then stop referring to the ethanol tax credit as a "subsidy", as you have throughout this thread.
Urban state politicians will have nothing to gain by voting to keep the tarriff in place.
Corn state politicians now have a much weaker case to make with the high prices.
My (totally unscientific) prediction is that ethanol will be tarriff free within 18 months.
My point is that while improvements are being made its getting harder to make those improvements and the improvements are getting smaller. There is a point of maximum potential where any improvements would be extremely small and very expensive and not worth the time, effort and cost.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Huh? The ethanol subsidy is a subsidy not a tax write off.
The ethanol "subsidy" is actually a $0.51 per gallon tax credit paid to the firms that blend it.
Tax credits and tax deductions are two different animals.
Once you can really show that you know this stuff then we can talk.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I'm not seeing an ethanol subsidy, using the strict definition of "subsidy" that you are using,
Ethanol blenders are provided with a per-unit tax credit. According to you, tax credits aren't subsidies. So if that's the case, don't refer to them as a subsidy.
(In the big picture, deductions and credits are indirect forms of subsidy, as the taxes not collected as a result have to come from somewhere else. But if that's the case, let's remember all the credits and deductions that are floating around the system, rather than one specific one that seems no worse than the others, given the goals behind it.)
"Ford Motor Company estimates the incremental cost of a FFV vehicle at $100 to $150 per unit."
http://www.e2.org/ext/jsp/controller?docId=9684§ion=stateofunion
"Now, this spot, to me at least, does smack of being disingenuous."
Yes but then we are also talking about marketing, where all the steaks sizzle and all the men/women are perfect.
Speaking of marketing, the basic question we are all trying to answer about E85 boils down to where the product is in the adoption process. I would suggest people dust off their Principles of Marketing text book and go to the section on "New-Product Adoption".
E85 is a new product. We are still in the early stages of product adoption. The people that are buying the product are innovators and early adopters. The skeptics are likely in the late majority or laggard group. Don't take that as an insult. It just may reflect how you feel about this particular product. You might be an early adopter when it comes to another type of product.
I consider myself to be in the early majority group. As E85 stations become more numerous and cars get built that take advantage of E85, like the Bio Saab 9-5, I plan on giving it a look see.
Do you hear that Bill Ford, just do it :mad:
You are NOT using my definition.
Ethanol blenders are provided with a per-unit tax credit.
A tax credit and a write off are two different things. Learn that simple truth and live will be happier for you.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Sadly, you've been greenwashed.
E85 is far from new. Heck, back in the late 90's absolutely *ALL* models of Ford Ranger were FFV, designed to use E85. When I first got my Prius, people were complaining about owning a E85 capable vehicle for years already but still no E85 outside of the metro area to fill the tank with.
That hardware & fuel technology has been around for quite some time now. So there really is no excuse why production capacity is only a pitiful 250,000 per year. Geez! Even "full" hybrid production is higher than that.
JOHN
Then you need to address this to Gagrice, who keeps referring to the ethanol tax credit as a "subsidy".
I simply spelled out what it was, so that people didn't falsely presume that Uncle was handing over big checks to ethanol blenders, is not the case.
A tax credit and a write off are two different things.
In the big picture, they are similar concepts. The difference lays in the proportion of savings to the taxpayer. (A deduction reduces taxes by the expense multiplied by the tax bracket, whereas a credit reduces the payable taxes by the full amount of the credit.)
The end result for both is the same: lower taxes. Obviously, the government uses these selectively to reward some behaviors and to deter others. These are used all over the board, for all kinds of things, and are surely not limited to ethanol.
If Ford is really serious why don't they make all their cars FFV's. The Escape Hybrid if it could use E85 would still get better city mileage using E85 than a regular Escape using regular gas.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D