Domestic Fuel

Borrowing part of a phrase from that great American humorist Mark Twain, when it comes to critics of ethanol, there seems to be “lies, damn lies, and statistics.” There has been a lot of misinformation spread about the green fuel, but there are some out there fighting the good fight dispelling these myths… especially the one that says it takes more energy to produce ethanol than what it’s worth.

One such fighter is Stafford “Doc” Williamson, who writes for Beverly Hills, California-based American Chronicle:

My underlying point is that by the same method of accounting gasoline takes more energy to produce than it contains, which is to say that if you count the energy that is necessary to build the drilling equipment to get it out of the ground, and the pumping energy to squeeze the last drops of oil from a well whose pressure has fallen so low that it no longer flows without assistance, and the energy to heat the steam to encourage heavy oil to flow into the tapped pool by heating it in the rock formations. This is the kind of energy accounting that if it came out that it really was more efficient to produce ethanol, the author of the “study” would “discover” a line item to pay for the revisions to textbooks to educate the next generation on the evils of fossil fuels in the first place, and on and on until the scales tilted in the desired direction. The real point of the energy input to any liquid fuel is the need to make the fuel suitable for the purpose for which we intend it, which in this case means a portable form of energy that is compatible with internal combustion engines that already exist in the majority of our vehicles. All these calculations that suggest it takes more fossil fuels to create a gallon of ethanol ignore the possibility that the ethanol producers might actually be environmentally conscious. They might be using biodiesel in the tractors and combines in the farm fields. They may be using crop rotation to minimize the need for fertilizers (if any) and pesticides that may be needed on their particular fields (which is only to say, somewhat more so than “average”, which is usually the number statistical studies rely upon).

Williamson goes on to make some remarks about President Bush and the war in Iraq that I might not agree with, but I’ll give him props for what he is saying about ethanol. I suggest you give this column (at least the ethanol part) a read.

I don’t usually post opinion pieces, but I saw this letter-to-the-editor and thought it rose to the level of a post for Domestic Fuel.

Glenn Gryka of Mesa sent this letter to the Arizona Republic:

Ethanol is not cost effective, so we are told.

It is more like “we don’t want to.”

Well said… in my opinion.

We’ve been trying to document all the different pieces of state legislation out there that have impacts on the biodiesel industry. This blog entry posted by John Gartner on Autopia – Wired News, I think, kind of sums up what the effects might be if the 11 states… Florida, Connecticut, Missouri, California, Oregon, Mississippi, Arkansas, Nebraska, Montana, Tennessee and New Mexico… raise their biodiesel requirements from two to five percent, and other states look at reducing taxes on biodiesel:

You can view this as interventionist government messing with the free market for both food and fuel. Or, you can say it is the states creating a minimum market that ensures interest from growers and refiners to establish demand that is necessary to battle oil dependency (for national security reasons) or for environmental purposes.

Another option would be that states (or the federal government) could use their purchasing power to create the market. If all government vehicles used only biofuels, it would provide the certainty that producers need while reducing the effect on the free market. This is done all of the time with emerging technologies, so it shouldn’t be a surprise if it happens here.

Well said.

Here is a great editorial by Mark Bennett of the Terre Haute (Ind) Tribune-Star.

Basically, he summarizes all of the criticisms being thrown at ethanol and says that, as a matter of national security, he’d still rather pay for a home-grown fuel than subsidize Middle Eastern countries.

If self-serving interests in farm states such as Iowa, Nebraska and Indiana drive up the price of corn and, thus, ethanol, we’re not likely to end up in an armed conflict. No amount of economic inefficiency offsets that price.

Bennett also points out the “hidden costs” of sticking with oil because it is “cheaper.”

Americans pay beyond the pump price for gasoline. Those added costs include the human and financial toll from military conflicts, as well as the expense of having to guard international shipping routes, not to mention directly and indirectly subsidizing unsavory governments controlling oil-producing countries.

Many more good points in his op-ed piece – a very good read.

Some Domestic Fuel readers may criticize us for not being more “balanced” in our coverage of mainly ethanol news – in other words, not reporting all the negative stuff. There’s plenty of that out there. We believe strongly that ethanol is part of the solution – not all, just part – and we are not going to criticize it or any other potential solutions to making our country more energy independent.

Truth About Trade & Technology has posted a Wall Street Journal commentary on the tortilla crisis in Mexico. The op-ed piece contends that the “cause of the corn price spike is too much government intervention.”

The sharp increase in Mexican corn prices, which fueled the tortilla price spike, followed big price increases for corn on international markets over the past year. The main cause, according to most commodity analysts, was the U.S. decision to subsidize ethanol made from corn. Growers who previously marketed their harvests to food and livestock companies suddenly have new demand from ethanol producers, who are also armed with a subsidy to make their bids more attractive. The increase in demand from government-subsidized ethanol producers pushed up prices.

Yet the U.S. isn’t the only government that is distorting markets. Mexico’s quota system for corn imports has exacerbated the problem.

Read the whole commentary.

Crisis prognosticator Dr. Lester Brown has gotten some ink lately with his predictions of how ethanol production is going to lead to world starvation.

National Corn Growers Association CEO Rick Tolman has a good analysis of Brown’s numbers in a recent NCGA “Our View.” He refutes Brown’s assertion that “the grain required to fill a 25-gallon SUV gas tank with ethanol could feed one person for a year,” especially by noting that he does not account for the distillers grains that are a by-product of ethanol production and fed to livestock.

And then there is this paragraph:

Brown also suggests, “As the price of oil climbs, so will the price of food.” I wish that he could talk with the farmers around the United States that are still getting less than $2 a bushel for their corn. Not even taking inflation into account, the prices paid to farmers today for corn are in many cases less than they were 30 years ago. Meanwhile, oil prices have more than doubled in the past three years. At the beginning of 2004, oil traded for $34 per barrel. As of August 23, 2006, the price was $72 per barrel.

Well noted. Farmers as a breed are among the hardest working, least appreciated laborers in this nation and I get tired of people who infer they are corporate fat cats who live on government subsidies while abusing our natural resources. Nothing could be further from the truth. They work harder than the majority of us who sit in air conditioned offices in the summer while they are sweating out the weather which determines what kind of crop they will produce, and watch the markets which determine what kind of price they will get. Meanwhile, we reap the benefits of the most wholesome, abundant and affordable food supply in the world. Given half a chance, I’ll bet we could produce an abundant and affordable energy supply as well.