Alternative-Fuels Push May Inspire Some Better Bets

President Bush's State of the Union address, which called for a nearly fivefold increase in the nation's alternative-fuel consumption by 2017, did little to silence critics who contend that new fuels like ethanol and biodiesel aren't likely to play a major role supplying the world's energy needs in the years ahead.

They see two key problems. First, the profitability of many alternative fuels -- without sizable subsidies -- is still in question. This is especially true now that the cost of raw ingredients used to produce "biofuel," including corn, has rocketed, squeezing profit margins for producers of those fuels.

At the same time, oil prices have receded since last summer when they hit $77 a barrel; they are now hovering around $55 a barrel. That could lead to losses at some biofuel plants if the trend continues.

In some parts of the world, notably Australia, the market for alternative fuels has already started to look like a bust, with the local media referring to "carnage" in the sector as once-hot companies cancel share offerings or watch their stock prices tumble.

Second, it's becoming clear that boosting output of agriculture-based fuels, such as ethanol, will cause significant new strains on the world's water and land resources, and could drive prices of basic foodstuffs to unacceptable heights, hurting poor consumers.

But even as the outlook for alternative energies darkens, some analysts see a more positive outcome from the latest turbulence: a forced redirection of resources toward alternative fuels that are more efficient and sustainable than the current batch.

http://www.nysun.com/article/46979

By all accounts, the ethanol industry is overheated, and the bubble is poised to burst.
But rather than let the market correct itself, the industry is seeking a bailout from the firm of Obama, Harkin, Dorgan, Lugar & Biden.
The senators have introduced a bill that would double the amount of renewable fuel that the federal government requires petroleum companies to mix with gasoline.
They are rushing the bill out for an industry that, according to a trade group, the Renewable Fuels Association, has at least 65 new ethanol distilleries under construction at the moment and will soon be producing more than 11 billion gallons of ethanol a year.

This glut is pushing prices down on the supply side, while high prices on corn — the main commodity needed for ethanol production — are pinching the industry's bottom line.
So the only thing that could prevent an ethanol slump is an instant and unlikely surge in demand.
No one in his or her right mind would ordinarily mix that much ethanol with gasoline.
So Messrs. Obama, Harkin, Dorgan, Lugar & Biden are trying to get the Congress to wave its magic wand.

We won't be able to take the beach at Normandy because the Germans have built a wall that can't be breached. We will never stop the Japanese because they will defend the country to the last living person. We will never get electric power to the farm because the line will have to cross vast areas with no people - the cost is too great. You can't build a computer small enough for home use.

Every time someone posts about alernate fuels there are dozens of comments about how it can't be done. Maybe it should be time for us to figure out how to make things work.

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