The Price of Corn
Who would have ever thought the price for a bushel of corn would go over $4.00? I certainly did not, but it reached $4.12 a bushel. For those who listen to radio and watch television, the price of oil has been dropping these past few months and actually went below $50 for a short interday time. Unleaded gas went for $1.37 (commodity price before federal and state taxes). These two commodities have something in common and that is energy used to run automobiles.
Ethanol, a liquid energy converted from corn using propane and electricity (generated by coal) yields about 1.5 gallons per bushel of corn. Corn is a raw material input and at 1.5 gallons per bushel is worth about $2.06 with unleaded gas at $1.37 (before tax). But Ethanol has 70% of the energy content of unleaded gasoline. This means you need to fill up sooner and get fewer miles per gallon. This means the value of a gallon of unleaded is about 95 cents. When the price for corn is greater than $1.42 per bushel, ethanol producers should hang it up.
However, the fact is more ethanol plants are being built. Who is paying for these plants? All you need to do is look in the mirror; it is you and I. That is right. Unleaded gas costs $1.37 before taxes, but $1.90 after taxes at the pump. Gas stations and producers pay no federal or state taxes, which means you and I are giving these producers 52 cents for every gallon they distill.
At over $4.00 a bushel, how on earth will these Ethanol producers make money? If the close, who will clean up their site? Who will be left holding the debt and unpaid bills? Mitch Daniel’s, Senator Lugar and Congressman Mark Souder need to stop subsidizing these wasteful, inefficient producers of Ethanol and let the industry sink or swim on their own. They should stop using taxpayer money to fund this con game.
The reality is for every gallon you pay $1.90 for, you are also paying some fraction of the 52 cents per gallon for those who use Ethanol.
posted by William Larsen @ 11:42 PM
7 Comments:
Somehow Bill...that doesn't surprise me one bit.
We're ALWAYS paying for something we're not using, don't want, or shouldn't have to be paying for in the first place.
And yet, if all these alternative fuel pundits would make it affordable to switch over, wouldn't that be the godsend we're all looking for?
((Heck, I love that "Mr FUSION" rig on Doc Brown's DeLorean in BTTF 2...beer cans and banana peels for fuel...whatta concept))
How much do you think it would cost to "retrofit" and older car to run on ethanol, kerosene, or even moonshine?
Answer: A LOT.
But Henry Ford had HIS Model T run on anything...and that was in the 1920s!
So until someone comes with a good, inexpensive "fix" for my dilemma, I'll play the crapshoot game at the pumps.
The alternative (for me) is costlier by far.
I heard today a second BioDiesel/Ethanol plant is going up. The reporter said it will produce 114,000 gallons of ethanol and consume 35,000 bushels of corn a day. Either the reporter got the numbers wrong or they are using something else besides corn. All data shows that the most you can get from an bushel of corn (high grade) is two gallons with the average at 1.5 gallons per bushel. This reporter has it coming in at over 3 gallons per bushel.
Our representatives should not provide tax incentives to any one industry. All it does is distort the economy. IT artifically props up one industry over another, or one company over another. We do not need to support companies that are not cost effective. The consumer in my opinion is the best indicator and best regulator of the economy.
With ALL these ethanol plants coming online...where exactly do we reach our "saturation" point?
And what happens to those 28 MILLION bushels of corn we EXPORT yearly?
Just something to mull over.
B.G.
SOmething else...saw a show on Histoery channel about alternative energy....SWITCHGRASS yields about 10 times the energy units per 1 unit of petroleum, whereas corn yields less than 7 units per 1 unit of petroleum...guess Indiana is missing that one big time.
Also....regarding our "saturation" point with corn and soy crops...when do we say enough with ethanol because it's impacting on our FOOD sources?
Do we drive or eat?
B.G.
B.G. I see an impact on other graings being planted now. I know farmers who used to plant a little in beans and other less "hearty" crops, but these less "hearty" crops paid more than corn which can take a lot of beating, but really did not pay that much. Corn was about $2 a bushel, now for the past couple of weeks it is over $4.00. Farmers are now switching to corn. This means less sweet corn (picked by hand), less tomatoes, beans, soy beans, pees, carrots and other crops. This will drive up the price of everything we eat.
A while back I looked at the amount of Ehtanol that could be produced based on the current 87 million acres of corn. It came out to about 14% of our gasoline consumption if all corn was converted. However, we are seeing more acres of corn and less of other crops. We are going to see a major disruption in our food and this will impact inflation.
I do not know where it will end, but I do not think I like the taste of Ethanol. If you see a good price for canned vegatibles, you might want to stock up and I do not mean a case or two.
B.G., I am not sure what you mean by "petroleum" units. I do know that one gallon of ethanol contains 83,000 Btu's. I also know that it takes about 120,000 Btu's to produce one gallon of Ethanol. What is not included in the energy used to produce the ethanol is the energy used by workers to get to the Ethanol plant nor the energy the farmer consumes to sustain his lively hood. It does include the energy used to pickup up, transport grain, seed, plow and deliver ethanol.
What we are basically doing is converting natural gas and coal energy equivalence to a liquid. Doing this does use very little "petroleum." However, in terms of energy it buys you little. In terms of polution, it does little as well, coal is dirty.
There have been many studies done, with many showing what I would say is a large variation in results. It could be two different competing groups. I do know that an energy credit is given to the by-products. These by-product credits are calculated in two ways. One is the equivalent energy that would be needed to produce them. The second is the cost pro ratio method. In this method, the value of the co-product to the Ethanol is used to divide the energy. I can see both methods having pros and cons.
There are many types of energy. Some are more compact than others. The more compact the energy source, the more valuable it tends to be. Take firewood for example. It has about 25,000 Btu's per pound. The problem is one of conversion. It is good for heating, but would be bad for fueling a car. Gasoline has about 120,000 Btu's per gallon.
Ethanol takes natural gas (a good transportable energy source) and Electricity (normally produced by burning coal).
The problem I see is what happens if we produce more ethanol? Can all the by-products be utilized efficiently? If not, then the energy credits must go to zero. Do some of the companies now competing with co-products go out of business?
As I have said before, if you truly want to reduce oil consumption, then go wind power. Replace those things, which use oil with equivalent items that use electricity. One that is high on the consumption list is Oil Burners in New England. Replace these, as they wear out not with new oil burners, but electric heaters. We need to stop burning something to convert it to useful work.
Petroleum unit = amount of fuel expended to produce alternative fuel like quantities (gallon for gallon as an example)...because most facilities STILL use petroleum-based fuels to give us whatever "alternative" we're working on at the moment.
While the use of oil is dwindling as plants use trash-to-steam and clean coal to fuel the processes needed for ethanol refinement, it's not becoming as viable to fuel an ethanol plant with ethanol...yet.
Seems they painted themselves in a corner on that one. The future holds promise though, especially with solar, wind, and geo-thermal power to supplant fossil fuel dependence. Costs are coming down...just not fast enough.
B.G.
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