Posted on 01/05/2010 5:03:06 AM PST by thackney
Fagen Inc. was pretty busy from 2006 to 2008, building 47 ethanol projects across the U.S., bringing in about $2.2 billion in revenue for the family-owned business in Granite Falls, Minn.
"Corn ethanol has been the best thing that has happened to the farmers since the invention of the combine," said 61-year-old Ron Fagen, who grew up in the tiny community of Maynard near Granite Falls. "It gives them another market for their corn."
But the ethanol party's over, according to the Minneapolis Star-Tribune:
...
Fagan is actually taking part in a project to build what is expected to be the largest biomass-fueled (i.e. wood scrap) power plant in the U.S. in the coming years for the City of Austin.
(Excerpt) Read more at blogs.chron.com ...
Maybe in Iowa but not in Florida, Georgia and South Carolina.
Florida 10% was $2.64 as of New Year's Day and is that today as well.
South Carolina was $2.39 for 0% and Georgia was $2.49 for 0%.
Range for a tankful of Florida fuel was 360 miles. Range for a tankful of South Carolina fuel was 420 miles. Still driving on the Georgia tankful and it is down to a 1/4 of a tank and the range on that tank so far is 350 miles.
Let's call the price of ethanol mix 'x'.
x = price of ethanol mix ($)
x + 0.1 = price of gasoline ($)
(10 miles/$) * (x) = (6.9 miles/$) * (x+0.1)
Solving for x yields a price of 22¢ per gal for ethanol mix and 32¢ per gal for gasoline. Where are you buying your gas?
Well well. Your “#2 yellow corn isn’t used for human food anyway” is not 0% but 10-12%.
I suspect that even that number is just direct consumption, not indirect.
For example, if any of it is used for feedstock, that is for human consumption as well, isn’t it?
We are also talking about humans in a worldwide sense, not just humans here in US.
The humans outside the US are the ones most susceptible to starvation and in need of food, regardless of whether it meets all the specs the USDA places on us for consumption here.
Since you have not challenged the fact that ethanol gives you less mpg than gasoline, there is something seriously wrong with your numbers.
You conflict yourself with your own words.
How can you say “Its a product that is competitive in a truly free market” with a straight face? There is no way it is competitive. It survives solely with government mandates and subsidies.
How dare I “Don’t try to impose an envirnmentalist moniker on me”? Reread my own post.
When someone spouts garbage such as “regardless of costs”. yes, I will always assume that they are people creating problems in our society.
Take care in your words you use.
By the way, I am a petroleum engineer.
Re: Ethanol cannot compete
EXACTLY!
An analysis of the ethanol subsidy from taxpayers shows that the Ethanol producers are paid 100% of the costs oil producers have (1) finding the energy, (2) producing the energy, (3) transportation costs and (4) marketing expense.
Total subsidy is around $2.58 / gallon ... or roughly what the cost of gasoline is at the pump.
Other really bad outcomes of Ethanol:
a) 10% less fuel economy (which is why folks will pay a little more for “no ethanol” gasoline
b) 10-20% lifespan reduction on the fuel system if your vehicle was not engineered for flex fuel
c) High water use in production
d) Higher pollution when manufactured, and when burned than with gasoline
e) Much higher costs along the entire food chain
f) Reduction in US exports of corn, which could partially offset high oil and gasoline imports
In short, it takes far more energy to make ethanol and burn it than it does to make gasoline and burn it.
You’re missing the point that the principal corn by-product of ethanol, distillers dried grains, is a very efficient protein feed for animals while raw corn is decidedly not. So the question is whether these poor starving masses that everyone seems to think American farmers have some sort of social obligation to feed are better served by the greater availability of high fructose corn syrup or by the greater availability of 24% protein meal.
In all my years on FR, you're the first person to get the relationship between farm subsidies and cheap food.
I'm not saying food is too cheap, I don't think it is, but it is cheap because the farm subsidies have really been a 'cheap foo for consumers' program.
You are just wrong.
If oil wasn’t subsidized, ethanol would be comparitively cheaper.
I’m for no subsidies of any kind to any industry. In that respect, I’m for ethanol if and only if the blinders on folks like you can think from that perspective.
You endorse subsidies everyday. Admit it. Once you do, don’t apologize. I don’t need it.
“If oil wasn’t subsidized, ethanol would be comparitively cheaper.”
The nonsense of your position is obvious to all.
The subsidization of ethanol directly via credits and indirect via mandates is inconsequentially small in the oil and gas sector as compared to that given ethanol.
I am speechless as to why you think making oil cheaper would impact the competitiveness of ethanol.
In Economics 101, making a competitive alternative cheaper gives one less reason to invest in something as the alternative is what people would buy.
So let me get this straight...
I support no tax credits for anybody.
you support tax credits for certain industries.
I say that gasoline/diesel would be 6 to 10 bucks without our tax dollars supporting Oil companies.
I say that food would be 100 to 200 percent higher in price without subsidies.
I say that ethanol (w/o ANY subsidies) would be a cheaper alternative to gasoline (because, mainly, we have a viable infrastructure to manufacture it) and that it could bring a revenue stream to farmers that surely would feel the pinch due lost farming subsidies.
Corn is what? 3 x higher than prices in 1950..Cars are 10 to 30 times higher, homes are 20 to 50 times higher...the list goes on.
I dont care if we are talking about ethanol or haircuts, if you are a capitalist, then the market needs to decide the price of a product, not us, as servants to a government that decides on “our behalf” what is the best thing to subsidize.
General Response—Point one-
First of all CO2 isn’t a pollutant, it is a neccessary
building block of life on earth, used by plants to produce
our food and fiber.And any process that produces more CO2
and water, less other carbon/hydrogen compounds and soot,
is actually cleaner, more efficient, like a clean
burning engine using a 10-15% ethanol gas mix.My 20 yr old
tandem Lincoln pickup that folks see running around central
Michigan, gets an extra mile per gallon on 10% ethanol
blend, due to ethanol an oxygen carrier and mix burns clean.
Two—Farmers get no price supports on corn, and only
aid ethanol gets is the oil/gas companies get about
a 4 billion per year dollar tax credit to blend in ethanol,
not money paid, but a credit. But ethanol on market is
almost a dollar cheaper than gas and its extra supply
has been calculated to lower gasoline pump prices enough,
that consumers save 4 billion dollars at the pump every
two weeks or so.Good deal for that much per yr tax credit.
And oil companies get 15 times that much in tax credits,
and depletion, on all their other operations, per year.
Three—Ethanol doesn’t short anyone on food. Ethanol
in practical terms is a secondary porduct of making high
protein feed concentrated that helps raise the meat we eat.
More lbs of that come from a bushel of corn than ethanol,
plus other products used in food and beverages.Prices
did go up on corn and other ag products as speculators
in 2006-7-8 pulling money out of real estate bonds going
bad, went crazy in ag sector before they went busted,
but prices now for corn as an example, are barely above
expenses. Their is about 90 million acres in corn,
And we have 30 million acres that land owners, mostly
non-farmer owned, have in con-reserve, which shouldn’t
be plus twice that much setting idle also, so we can have
plenty of ethanol and high protein feed if we need it,
which most farmers want to do. You raise 140 bushel per
acre corn, no till and roundup resistant type using
least amount of work and energy to raise, you take off about 8000 lbs corn kernals per acre, but leave 15-20 tons of stalks to build up the soil. By increasing soil carbon and organic material content, so you can improve land to raise more corn, which by the way uses CO2.
Ed Hubel.
You are still ignoring what I said.
OIL COMPANIES ARE SUBSIDIZED. They are subsidized with tax breaks. My position is to remove them, impose tariffs on foreign oil and allow the ethanol to compete with no subsidy.
I’m giving you the benefit of the doubt and assuming that you just can’t see well.
A petroleum engineer is not an economist. I’m a nuclear engineer that plays investment banker for a firm that invests in energy projects, mainly oil investments.
My personal position is contrary to the typical mantra read here. I’m for no subsidies at all for anyone, including farmers AND oil companies.
I think corn should be $25 bucks or more a bushel. A lb of hamburger? $10 bucks. You like your cheap food and cheap gas. Simply admit that you like some subsidies but dont like others.
What is your avg. range (Full Tank) for the 10% blend versus no blend? If you’re not going as far on the 10% blend as you would on the non blend, then your cost comparisons are skewed..
I agree, Ed. The subsidy comes in the form of a production tax credit.
Again, I like ethanol.
Corn would be much, much higher with higher farm equip fuel costs and then people would rely on it as a staple when compared to other foods that would lose a farm subsidy, like wheat.
I agree with all of your points.
Not true around these parts (Texas). Maybe in the corn producing states but not everywhere.
In Alaska, the ethanol is driving up the price as they have to ship it in from a long ways.
What other industry could afford these types of tax breaks? What other industry typically pays 2 to 3 times as much in taxes than they keep for profit?
If your business taxes where tripled, then cut 10%, would you claim they were subsidized by the 10% tax break?
ExxonMobil 2007
Revenue $404.6 Billion
Profit $40.6 Billion (10.0%)
Taxes $102.5 Billion (25.3%)
Sales-Based taxes $31.728B
Other taxes and duties $40.953B
Income taxes $29.864B
2007 Financial & Operating Review
http://www.exxonmobil.com/corporate/files/news_pub_fo_2007.pdf
Page 16
- - - - - - - - -
ConocoPhillips 2007
Revenue $194.5 Billion
Profit $11.9 Billion (6.1%)
Taxes $30.4 Billion (15.6%)
Taxes other than income taxes $18.990B
Income taxes $11.891B
2007 Annual Report
http://www.conocophillips.com/NR/rdonlyres/3838234F-F20C-4BCE-AE8D-78DE29D67455/0/07RevisedARfinal.pdf
Page 60
- - - - - - - - -
Chevron 2007
Revenue $220.9 Billion
Profit $18.7 Billion (8.5%)
Taxes $35.7 Billion (16.2%)
Taxes other than income taxes $22.266B
Income taxes $13.479B
2007 Annual Report Supplement
http://media.corporate-ir.net/media_files/irol/13/130102/reports/CVX_ARsupp07.pdf
Page 3
- - - - - - - - -
Marathon 2007
Revenue $62.8 Billion
Profit $4.0 Billion (6.3%)
Taxes $8.5 Billion (13.5%)
Consumer excise taxes $5.163B
Other taxes $0.394B
Income taxes $2.901B
2007 Annual Report
http://www.marathon.com/content/documents/investor_center/annual_reports/annual_report_2007_book.pdf
Page F-4
We agree: Neither of us has any problem disallowing tax breaks or subsidies from anyone. Freedom in the marketplace is what separate true value from that which is not.
The amount of tax breaks or subsidies as a % of total enterprise that goes to oil and gas companies is very small compared to that of the ethanol industry, so much so that oil and gas companies would still survive if they went away, whereas ethanol companies would have a very difficult time.
By the way, my degree is in petroleum engineering but my work is as an economist for a number of years(It’s even the title on my business card). After 37 years in the industry, I believe I am entitled to have an opinion that is more than a novice.
Don’t always assume that those you interface with are as clueless as you originally indicated me to be when you attacked me.
I think reasonable people can disagree when the facts are both presented.
You so far have a tendency to not address the pointed questions I asked concerning tagline 50, so I guess you may not be all that reasonable.
Even other crops the prices are high enough
so there is no price support now.
3/4 of the farm bill is for food stamps and
most the rest is for greenie nonsense that
raises production costs for farming and
about everything else.Ed Hubel
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