Posted on 10/02/2007 7:59:24 AM PDT by shrinkermd
The price of ethanol has fallen by 30% over the past few months as a glut of the corn-based fuel looms, while the price of ethanol's primary component, corn, had risen. That is squeezing ethanol companies' profits and pushing some ethanol plants to the brink of bankruptcy.
Some ethanol companies are "under deathwatch" now, says Chris Groobey, a partner in the project-finance practice of law firm Baker & McKenzie, which has worked with lenders and private-equity funds involved with ethanol.
That could be fine for big efficient players like Archer-Daniels-Midland Co., one of the nation's biggest ethanol producers by output. ADM and other big ethanol companies probably can ride out the storm, even though they might have to scale back on their production. Smaller players may not fare as well, and may be snapped up by bigger survivors.
The downturn exposes the industry's reliance on political support in Washington, which has offered tax credits to refiners to blend ethanol with gasoline, as well as tariffs on imported ethanol and other measures.
...Ethanol companies are seeking increases in pending energy legislation in the amount of ethanol refiners are required to use. At the same time, food, cattle, poultry and other interests are quietly nudging lawmakers to pull back on subsidies that encourage ethanol production and have indirectly led to increases in food costs due to the increase in the price of corn and other grains.
"It's probably going to get worse before it gets better," said Brian Bolster, a vice president in the investment-banking division at Goldman Sachs Group Inc., which has invested in at least one ethanol plant. He nevertheless remains bullish over the long term for the industry, amid expectations of increasing government support, infrastructure improvements and other factors.
(Excerpt) Read more at online.wsj.com ...
Its important to note that, while ethanol is an important part of Brazil’s energy supply, they in fact drilled their way to oil independence. They have drilled a collection of deep water oil wells and they recently celebrated the drilling of the well that put them over the top.
The key thing, however, is not merely ethanol versus oil, but the determination to achieve energy independence. And the best strategy is to let a thousand blossoms bloom, so to speak, so that we never have all of our eggs in one basket.
Coal gasification is do-able, its old technology, and we should be doing it now. Hydrogen power needs nuclear power to make it practical, and we should be building 50 nukes right now. The oil companies said they needed $3 dollar a gallon gasoline to make oil shale practical; we’re there, and we should be pushing to bring it on line.
And don’t leave out oil; we have plenty of our own, and rules that make it off limits need to be set aside. That is going to take a generation of politicians with backbone, which I have not seen yet. The three issues I will be voting on this time around are simple; victory in the military war, secure the border, and a concerted effort to achieve energy independence quickly.
I don’t care if some sector of American businessmen get filthy rich in the process, in fact thats the idea, it should be American drillers, farmers, builders, and investors who are harvesting the profit, rather than sheiks who will feed their petrodollars into madrassas and suicide cults.
Ethanol cuts the ragheads out of the deal.
current situation is mostly a
shortage of transportation
where do you get that crap from?
the issue is liquid energy
ethanol cuts the filthy ragheads out of the deal
I’m investing in biodiesel. The US produces 10 billion gallons of rendered chicken fat a year which is readily converted to biodeisel almost 1:1. This does not count other rendered fat byproducts. The engine fumes smell like french fries.
The object of the exercise is to reduce dependence on imported oil.
Exactly right!
And Global Warming is a SCAM....CO2 has no relevance...and is just part of the SCAM!
I didn’t say that I wanted the government to pick ethanol or target it.
I read an article in Rolling Stone (so take it for what it's worth). It was a real hit piece on ADM, and how they bought their way into a corn-based ethanol gov't subsidy. No idea how truthful it was, but I was unsurprised.
I love it. So many cynical farmers have slashed every other crop to grow corn for this boondoggle. I wont shed a tear for them.
Fuel ethanol use in the United states has increased by 46% in the last year. A year ago, the complaint was that ethanol was too expensive to be used, now that the price has come down, the complaint is that it’s not expensive enough. With a rack price of $1.56 per gallon and with DDG’s at $110.00 per ton, there is still over $2.00 per bushel margin in distilling corn for fuel. Any other processor would kill for that kind of margin.
US Energy Department estimates ethanol production efficiency as 1.34 units of energy out for 1 unit in, with projections for improvements in both corn-based processes and biomass-based processes going as high as 2 to 1. This is hardly "no savings". See the link below.
Jeez, dude. With corn at $3.49 per bushel, why would anyone think you should shed a tear for corn farmers?
Here’s a link to the actual paper:
http://www.atmos-chem-phys-discuss.net/7/11191/2007/acpd-7-11191-2007.pdf
And here’s a link to some more balanced views of the claims made in the paper:
http://www.rsc.org/chemistryworld/News/2007/September/21090701.asp
NB that the paper in which these claims are made hasn’t even finished the peer review process yet, and the press is breathlessly reporting this.
Know this folks: If we, the US, came up with a viable solution to “global warming” that required no hit to our economy, or even resulted in increased economic growth, the Europeans will find *something* terribly wrong with it. I don’t care what the solution is.
That’s because this hysteria about anthropogenic global warming isn’t about the science, it isn’t about facts. It is about the EU wanting to find a way to hobble the US economy.
If the EU scientific community were actually concerned with the *facts* about CO2 production, they’d be all over China and India - where they’re building coal-fired power plants as fast as they can. In China, they’re putting one coal-fired power plant into production every week.
You don’t hear about that from the AGW hysterics, do you? No, you see them spending their time and effort attacking anything and everything we do here in the US. Why is that?
Well, the one thing we can say with certainty is that they’re not really all that concerned with the real sources of CO2, especially now that China, not the US, is the biggest producer of CO2 from burning coal.
BTW — the study Fox News is hyperventilating about isn’t “astounding insight” — it is a rather bold upwards revision to how much NO2 is liberated from plant growth in fertilized soil. The claims very much need to be proved.
Because if corn had maintained the 1973 price adjusted for inflation, it would be $14/bu right now.
Bravo. Someone with some sense!
You’ve nailed the issue exactly: the key issue here is to quit exporting dollars.
If the Saudis break their dollar peg, we’ll really see a jump in oil prices. We don’t need to worry about them breaking the peg if we only produce enough energy to offset reducing our crude consumption by 10%. That’s all we get from the Saudi’s.
You are still making out with it being a buck cheaper than gas....
Corn prices plummeted too...its a win win.
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