Thursday, September 6, 2012

Ethanol: U.S. Politicians Ignore Global Calls to Suspend Ethanol Mandate

With the presidential elections in the U.S. just a short couple of months away, you would think one of the candidates and/or political parties would tackle the horrendous ethanol scam. But alas that's not going to happen.

According to Robert Bryce at The Daily Beast, it's all about votes, even though the devastating practice and support and enablement from the U.S. government continues.

He said this:

The two presidential candidates dare not call attention to the corn-ethanol scam despite the drought that is ravaging the Corn Belt and sending corn, and other grain prices, to record highs. Mitt Romney and Barack Obama apparently want voters to forget that last month both the United Nations Food and Agriculture Organization and the International Food Policy Research Institute called on the U.S. to suspend the mandates that require gasoline sellers to blend increasing amounts of corn ethanol into their fuel. (This year those mandates will require those fuel sellers to mix 13.2 billion gallons of corn ethanol into our gasoline. By 2015 the mandate will increase to 15 billion gallons.)

On Tuesday the FAO, in conjunction with the World Food Program and the International Fund for Agricultural Development, warned that because of soaring grain prices, the world faces “a repeat of the 2007–2008 world food crisis.” The nations of the world need to “act urgently to make sure that these price shocks do not turn into a catastrophe hurting tens of millions” of people. The statement said the countries of the world “need to review and adjust” policies that “encourage alternative use of grains” including, of course, “biofuel mandates.”

What accounts for the silence of the candidates in the face of such urgent appeals? One logical answer can be found in a simple number: 27. That’s the number of Electoral College votes at stake in three key states: Iowa, Minnesota, and Indiana. Those three states, which account for more than one third of all domestic ethanol production capacity, have exactly 10 percent of the electoral votes needed to clinch the race for the presidency. And those 27 votes are critical for both candidates.
How about whether or not corn-based ethanol affects food prices?

At least 17 studies—done by organizations ranging from Purdue University to the World Bank—have exposed the link between increasing biofuel production and higher food prices. Last year the Farm Foundation, a nonprofit entity formed in 1933 that focuses on agriculture issues, issued a report saying that the ethanol mandate creates a “large, persistent and non-price responsive demand for corn.” The report went on, saying “there is little doubt that biofuels play a role in the corn price level and variability, and this has spilled over into other commodity markets.”

Thanks to Obama’s EPA, the food-versus-fuel problem is going to get worse. The agency is expected to approve the use of sorghum for ethanol production. Like corn, sorghum is a feed grain. But the agency is planning to designate ethanol made from sorghum an “advanced” biofuel, which will allow distilleries to sell it for a premium price. (Sorghum requires less water than corn but yields about the same amount of ethanol per bushel.)

We at Ethanol Fix vehemently oppose the ethanol racket, and call for the abandonment of this outrageous and damaging environmental, and more importantly - people-harming practice.

The ethanol mandate in America not only needs to be suspended, it needs to be ended and the industry shut down.

People in America should decide whether or not they want the harmful ethanol in their vehicles, as well as be forced to use it in their small equipment.

Thursday, July 12, 2012

Ethanol Production Drops to Two-Year Low

Ethanol production plummeted last week to 821,000 barrels a day, a decline of 4.2 percent in the United States. That the lowest ethanol production level since July 2010, according to an Energy Department report.

With corn prices surging towards $8 a bushel, over the next couple of months we could see ethanol demand plunge even more.

Because there is little hope of rain coming soon, the drought will continue to devastate the corn in the Midwest, with a drop of a little over 1 percent daily as to the quality rating of the crop.

On the Chicago Board of Trade denatured ethanol for August delivery fell 2.8 cents, or 1.1 percent, to $2.44 a gallon

For the cash market, U.S. Gulf ethanol was down to $2.47 a gallon in Chicago, a loss of 5.5 cents, or 2.2 percent. In Chicago it fell 5 cent to $2.41, a decline of 2 percent.

New York ethanol was down to $2.53, falling 5 cents or 1.9 percent. On the West Coast it fell to $2.63, down 4 cents or 1.5 percent.

Corn took a breather, with December delivery in Chicago declining to $7.0475 a bushel, sliding 12.75 cents, or 1.8 percent.

Friday, June 22, 2012

Pacific Ethanol (PEIX) Adding Corn Oil to Business

Copying a number of other producers of ethanol in the United States, Pacific Ethanol (PEIX) is the latest to add a corn oil business to its revenue streams.

At this time Pacific Ethanol is installing corn oil separation technology at one of its four plants, and will have the rest outfitted with it by the first quarter of 2013, according to the company.

They added that revenue should be generated by that same quarter from the corn oil business, implying the first money will be made from the current installation at the one plant.

Executives at the company noted that the first plant should produce approximately 12 million pounds of corn oil, which would add an additional $4.5 million, or 7 cents a gallon to the operating income of the company on an annual basis.

It'll be interesting to see if this also produces a glut in corn oil, as how much demand is there for it if most of the ethanol companies increase corn oil supply. That would drive prices down, possibly defeating the purpose.

Ethanol companies should never have been propped up by the government, and now that they were artificially created, they have to adapt to the real market, where demand for the product is low, along with ethanol margins.

Add to that the destructive nature of ethanol on small equipment and older cars, and you have a very small percentage of people that are supportive of it. That doesn't account for the outrageous toll on the environment which enormous corn inputs cause.

Continual failures in the industry point towards it being a typical disaster when governments interfere with markets.

Pacific Ethanol is a very short step towards having to declare bankruptcy, and its late move into the corn oil business could end up being the nail that closes the coffin on it, depending on supply and demand in that segment.

Its share price of 57 cents tells you what investors think of it.

Wednesday, March 7, 2012

Mississippi Wastes $75 Million on Ethanol Scam

I wonder if the politicians in Mississippi know how to read or listen, as the news of the hundreds of millions wasted on so-called renewable energy by the Obama administration doesn't seemed to have reached the deep south, with Mississippi throwing around $75 million in low interest loans for the building of cellulosic biofuels plant in the state.

They also have offered up $155 million in tax incentives to get the boondoggle going. What a criminal waste of the taxpayer's money. And yes it is taxpayers money because they're the ones that will have to pay for it when it crashes and burns.

The company confisgating the state loan is named Virdia, which just changed its name from HCL Cleantech. They take natural matter such as woodchips and other plant matter and convert it into sugar, which is then converted into ethanol.

Virdia CEO Philippe Lavielle admits the amount of money offered by the state, along with $10 million in venture debt and another $20 million in venture capital equity isn't enough to build a viable plant that can successfully operate at a commercial level and compete against corn-based ethanol. He confessed concerning the money that "it takes more than that. It takes a chemical firm that will want to build it to have access to sugars for their own conversion processes."

According to Lavielle, the costs of building a commerical plant which would produce about 500,000 tons of sugar on an annual basis is $380 million. That could supply a 25-million-gallon ethanol plant, according to the CEO.

Another negative factor and complication to the success of such a plant would be the need for it to be located close to a chemical plant or a paper mill so it could be able to tap into the power infrastructure serving those businesses, and in the case of the paper mill, to be able to use the existing equipment for handling wood. Lavielle says it'll take up to three years for a plant like that to be built.

Historically capital requirements and projections are almost without exception much higher and take a lot longer to reach the expected goals.

To be able to compete with the scammy and damaging corn-based ethanol, Lavielle says corn would have to remain at a price of over $4 a bushel. While corn prices in the United States are higher now because of droughts in Argentina and Brazil which are expected to generate more exports for U.S. corn, that's a temporary situation, and corn could easily plummet below the $4 mark very rapidly.

Add to this the cost factors associated with cellulosic, which includes the requirement of having a wood production facility very close or the cost of shipping wood and plant matter to the facility soars.

Looking at the overall picture, ethanol, no matter what the form, is a waste of valuable time and money.

New discoveries of oil and gas shale, along with the technology to extract it from the rock, has changed the entire energy game in the United States, which now has enough energy to last possibly for centuries.

The known reserves already are estimated to last for well over a century in the United States, and there are many areas where it is unknown as to how much there actually is in America, let alone across the world. That's the future of American energy independence, not these idiotic and irresponsible projects that are truly nothing more than a scam. Ethanol, whether produced by corn, wood chips or plant material, is nothing more than that.

The people of Mississippi should be outraged over this travesty, but they're surely drinking the kool aide of jobs being created, even though not too long afterwards when the company declares bankruptcy, they'll all be lost.