The Food Crisis

The global food crisis is shaping up to be a huge problem. It threatens to substantially raise grocery bills in wealthy countries such as our own, but it also threatens to send millions of the world's poorest into malnutrition and starvation. And yet you won't hear much about it on the news networks, even though it has been perpetuated by American food and energy policies and will impact us quite directly. That's almost certainly because it's a complicated problem with no easy answers, and no easy targets for blame. But while our talking heads may wallow breezily in their ignorance, you and I have no such excuse. In that vein, I highly recommend this excellent series by the Washington Post on the food crisis; how it happened, what it means, and how it's effecting people the world over, from bagel producers on the East Coast to poor families in Mauritania. Read it and inform yourself as best you can, because it's a problem we're going to be dealing with for years to come and our only hope is to spur our normally pandering Congressmen and women to take what actions we can take to alleviate the problem.

Is sugar the sweet solution?

Xanthippas forwarded me this blog post from Balloon Juice which links to a post over at The Agitator which finally results in a link to a WaPo article about the Sugar Lobby. If the idea that there is a lobby specifically for the sugar industry surprises you, it shouldn't. Every major area of agriculture has their own lobby, and you probably have heard of the corn lobby. So anyway, I do suggest reading those blog posts and the original article. If I have time, I'll get around to writing up a post about the evils of the sugar lobby (and the corn lobby), but what I want to respond to is some of the issues raised by Michael D. in his post. (Please don't sue me for copyright infringement for copying and pasting your whole post!)

Radly Balko has some issues with U.S. sugar lobby (they’ll create a lobby for anything, won’t they?) I encourage you to read it and the accompanying Washington Post article. Radly sums it up as follows:

If an “alternative energy” source is so efficient that it needs massive government subsidy to event (sic) exist, much less survive, it’s not a viable long-term source of energy.

No kidding (and, by the way, it’s exactly what’s happening with the corn-based ethanol industry here.)

But look to Brazil – they’re doing just fine with sugar cane ethanol. In fact, Brazil has achieved what has eluded us forever – energy independence. In fact, three-quarters of its automobiles are able to run on ethanol, and there is an ethanol pump at just about every fuel station. Cane ethanol now accounts for 40% of Brazil’s transportation fuel. And one thing Brazil has figured out that we have not: corn-based ethanol (the type we produce here) is not energy efficient. It takes nearly as much energy to produce corn ethanol as it saves (cane ethanol doesn’t need to make the transformation from carb to sugar) – not to mention the adverse effects that increasing corn prices will have on the world economy.

All this leads me to ask a question, because I have not been able to find an answer. Maybe I’m not looking hard enough. Can we produce sugar cane here? And, even if we could, would enough people have the guts to stand up to the corn lobby to make anything happen anyway?

Or, are we all just that apathetic?

Now, if you read the comments left on this post there's already been a lot of enlightening discussion. There are a lot of pros and cons on these issues, but I feel that in general there's a lack of informed debate going on. On the one hand you have people writing how corn ethanol is a boondoggle. Their arguments are that it'll raise food prices, it's not efficient enough, it's only profitable because of government subsidies, people aren't factoring in the pollution caused by growing the corn, etc, etc. On the other hand you have the corn lobby telling us that corn-based ethanol is the way of the future with less pollution, will give us energy independence, bring more money back to America, etc, etc.

But when I hear individuals talk about it they usually have either decided to be for it or against it based on no more than a couple of points. What annoys me the most is those who have decided that biofuels are a bust because they're currently expensive to produce and are not a magic solution that makes everything better in one go. Anyhow, I'll get back to that later. Let's address the first point that Radly Balko brought up:

If an “alternative energy” source is so efficient that it needs massive government subsidy to event (sic) exist, much less survive, it’s not a viable long-term source of energy.

No kidding (and, by the way, it’s exactly what’s happening with the corn-based ethanol industry here.)

According to this article published in 2006:

[O]ne major subsidy is the ethanol program, currently with a $0.51 per gallon subsidy, which will in the near future amount to a bill of over $3 billion annually on 6 billion gallons of production.

The last time I was at the gas station near here that has an E85 pump, it was selling for nearly a dollar less than regular unleaded. Take away that subsidy and you still get a price nearly a half-dollar less than the cheapest grade of gas. Not to mention that the price of corn isn't nearly as volatile as the price of gas. It varies some, but not really week to week or day to day. Does corn ethanol need a subsidy to exist? No, not really. Furthermore, as I pointed out in my post that I linked to, oil is massively subsidized.

There is growing awareness in this country that the full cost of using oil for transportation is "subsidized" -- that is, gasoline prices paid by consumers do not reflect the full economic cost to society. The true cost is hidden by myriad direct and indirect public subsidies, which include

• reduced corporate income taxes for the oil industry



• lower than average sales taxes on gasoline



• government funding of programs that primarily benefit the oil industry and motorists



• "hidden" environmental costs caused by motor vehicles, namely air, water, and noise pollution

You can read the full article for yourself, but basically we're talking about hundreds of billions of dollars per year. And what would we be doing in the Middle East if not for oil? If not for oil, we'd pretty much treat that area of the world like we do Africa. How much has the war in Iraq cost us now? To me, the idea that somehow there's something more wrong with corn ethanol than with oil simply because there's a per-gallon subsidy for ethanol whereas oil's is hidden away is just wrong-headed. The corn subsidy is not an argument against ethanol, despite the fact that I favor getting rid of corn subsidies.

Then some opponents attack the energy efficiency of corn based ethanol and declare it to be energy negative. Someone has already done the job of refuting that for me, so I quote Wikipedia:

Opponents of corn ethanol production in the U.S. often quote the 2005 paper of David Pimentel, a retired Entomologist, and Tadeusz Patzek, a Geological Engineer from Berkeley. Both have been exceptionally critical of ethanol and other biofuels. Their studies contend that ethanol, and biofuels in general, are "energy negative", meaning they take more energy to produce than is contained in the final product.

A 2006 report by the U.S. Department Agriculture compared the methodologies used by a number of researchers on this subject and found that the majority of research showed that the energy balance for ethanol is positive ('1.24 for corn ethanol). A 2006 study published in Science analyzed six studies, normalizing assumptions for comparison; Pimental and Patzek's studies still showed a net energy loss, while four others showed a net energy gain. Furthermore, fossil fuels also require significant energy inputs which have seldom been accounted for in the past.

Not that I'm questioning their authority, but how did an entomologist and geologist get into this anyway? So look, most people agree that corn ethanol is energy positive. Not incredibly energy positive to be sure. But it's viable.

Let me bring the point about corn subsidies back up, because perhaps some people misunderstand what that subsidy does. Corn is America's #1 crop, both in acreage under cultivation and sales. From the Christian Science Monitor, an interview with Michael Pollan:

And we subsidize this overproduction. We structure the subsidies to make corn very, very cheap, which encourages farmers to plant more and more to make the same amount of money. The argument is that it helps us compete internationally. The great beneficiaries are the processors that are using corn domestically.

Now who would that be, and why?

• Of 10,000 items in a typical grocery store, at least 2,500 use corn in some form during production or processing.

• Your bacon and egg breakfast, glass of milk at lunch, or hamburger for supper were all produced with US corn.

• Besides food for human and livestock consumption, corn is used in paint, paper products, cosmetics, tires, fuel, plastics, textiles, explosives, and wallboard – among other things.

• In the US, corn leads all other crops in value and volume of production – more than double that of any other crop.

• Corn is America's chief crop export, with total bushels exported exceeding total bushels used domestically for food, seed, and industrial purposes.

In short, the price of corn in the world is determined by America's corn subsidy, which keeps us overproducing this crop. Which, you may say, is great for people in third world nations that need our food. Hopefully they can get it. But that's also the reason it makes sense to use corn for ethanol. Corn is plentiful. Corn is grown in truly vast quantities. This is for political reasons that have nothing to do with whether we want or need that much corn. I strongly recommend reading Michael Pollan to understand why we actually need not to produce that much corn. On the one hand, we need to quit making corn artificially bounteous and cheap because the uses we put it to such as cattle feed and hfcs are absolutely terrible. On the other hand, without the subsidy, there simply wouldn't be as much corn to go around. So you have a choice, get rid of the corn subsidy to discourage corn ethanol production (since the low price of corn is the main reason for ethanol's profitability, not the ethanol subsidy) and dramatically cut back the amount of corn for world food consumption, or keep the subsidy which will only encourage more profitable uses for the corn than selling it at rock-bottom prices to third-world nations, namely ethanol production. The best argument against corn ethanol is this artificial over-production of corn, but no one wants to face the reality of what ending that over-production would mean.

I'm going to leave that alone for now and move on to the next point. As Michael D. points out in his post:

But look to Brazil – they’re doing just fine with sugar cane ethanol. In fact, Brazil has achieved what has eluded us forever – energy independence. In fact, three-quarters of its automobiles are able to run on ethanol, and there is an ethanol pump at just about every fuel station.

Can we produce sugar cane here? And, even if we could, would enough people have the guts to stand up to the corn lobby to make anything happen anyway?

There are several answers here, all of which lead pretty much to the fact that the US cannot rely on sugarcane as a source of ethanol.

The US does produce sugar. Nowhere near on the scale that Brazil does, but sugarcane only grows in tropical or subtropical environments. Sugar beets produce slightly more than half of US sugar production (excluding hfcs, that is). Unfortunately, sugar beets require four times as much land as sugar cane to produce the same size crop. Sugar beets are also a rotational crop, which means that averaged over a period of years, their production is going to much lower than sugar cane because they have to take some years off. The USDA puts US sugar production at 7,665,000 tons for 2007. Brazil's is 32,100,000 tons. You can already see that the environment is partially responsible for this huge disparity in production. Brazil can grow that much and probably more. There's no way the US could hope to match that production. Now to put to rest the idea that sugar prices are depressed in the US, thus discouraging sugarcane and sugar beet growth, the US lays tariffs on all sugar imports to keep prices up. The USDA manages all sugar production and they only allow domestic sugar producers to make so much, and they only let so much come in from the world market. In short, they're artificially keeping all sugar producers profitable instead of making them compete (so much for laissez faire, eh?).

Basically, even if it there was a substantial profit motive, not enough sugar can be cultivated in the US to meet even a small fraction of ethanol demand. That's another reason corn is far more prevalent right now. And of course, lastly there's the USDA study which opines that sugar ethanol is unprofitable at current gas and corn ethanol prices:

Producing ethanol from sugar beets and sugarcane is estimated to be profitable at current ethanol spot prices and at about breakeven over the next several months, excluding capital replacement costs, based on current futures prices for ethanol. Over the longer term, the profitability of producing ethanol from sugarcane and sugar beets depends on the prices of these two crops, the costs of conversion, and the price of gasoline. A moderation in the price of gasoline and a return in ethanol prices to their historic relationship with gasoline prices could push the price of ethanol well below breakeven levels for converting sugar beets and sugarcane into ethanol. However, the market for crude oil remains very volatile and highly sensitive to events in the Middle East, making it very difficult to forecast future trends in crude oil and gasoline prices.

The "now" of the quote is during 2006, when their estimated cost of gas was $4/gallon. Not that that won't happen again, but that's their calculated break point for profitability. So until we reach that again, there's not a lot of incentive for sugar producers to contribute to ethanol.

All well and good, but what if we ended the tariffs and imported sugar for use as corn ethanol? The question there is whether there's enough world capacity to actually supply us with the quantities of sugar we need to make ethanol in an amount substantial enough to replace gasoline. While there is excess capacity in the world market, it's really not enough. I read somewhere that if all of America's corn were devoted to ethanol, it would replace 12% of total gas consumption. Borrowing from wikipedia again, the US had 243,023,485 passenger vehicles registered in 2004. Now quoting the Michael D's post again, "Cane ethanol now accounts for 40% of Brazil’s transportation fuel." I can't seem to find a solid answer for how many cars Brazil has, but given that Brazil's population is about 183 million, and that the US has the highest per-capita ownership of cars, I'd have to say there can't possibly be any more than 150 million Brazilian cars. 40% of that would 60 million vehicles. That's a wild guess but if anything it's high, so let's just stick with it. Now Brazil might be able to provide enough sugar to fuel twice that many cars. Or even three times that many. But Brazil has an output of sugar roughly 4.5 times higher than the US. The US doesn't have the extra capacity to use sugar for fuel at all. Besides that it makes more money for farmers to sell it as sugar. Basically sugar's a no-go just for economic reasons.

People tend to get dogmatic about their arguments and I try not to fall into that. Corn ethanol is not the best solution. But that doesn't mean we shouldn't use it. Sugar ethanol simply can't provide much ethanol. Cellulosic ethanol is by far the best, but current technologies do not allow mass production or cost-effective production. And because of this there are people who say that biofuel is not the answer. But you know, technologies come along, especially with a little government help (like the railroads, highways, phones, computers, etc). Corn ethanol will never be the perfect solution, but that doesn't mean we shouldn't use it. Couple any biofuel with hybrid cars and you get a powerful answer to oil. And the more we start to use them, the better they'll become. We can use corn ethanol as a transitional state to get us started on the path to clean fuels. There's no real reason not to. Anything is better than the pollution and war that oil brings.

Someday we'll get to the point where we derive most electricity from sunlight. Someday our cars will run on switchgrass and batteries that we charge at home off of sunlight. But we can't make that leap in one generation of vehicles. We can't avoid the problems that transitional technologies will bring. That doesn't mean there's a reason not to embrace them whole-heartedly in the meantime, and always be looking down the road at better options. We have to start somewhere, right?

Ethanol may cause food shortage

So this is the dark side of corn-based ethanol:

"Resorting to biofuels is likely to exacerbate world hunger," they said. "Several studies by economists at the World Bank and elsewhere suggest that caloric consumption among the world's poor declines by about half of one percent whenever the average prices of all major food staples increase by one percent."

To which I say, it's a bad thing, but the price of corn in the world market shouldn't matter. We over-produce it already. It's not the great crop people think it is, and it shouldn't be eaten as much as it is. It's got a much lower nutritional value than wheat. It's just easy to grow. It's the kind of food that will keep starving people alive, but starving. Besides which, as the demand for corn goes up, farmers will just plant more corn. I'm not sure that the demand on corn for ethanol will actually cause a shortage. We'll just have to see about that.

In the short term, we can also just subsidize farmers to overproduce more corn than we already do, so that shouldn't be too much to ask. If we want to end world hunger, the answer isn't simply to produce more cheap, bad food.

The truth is that we need to approach world food supplies in a completely different manner. Controlling the number of people on this planet is easier than trying to make all our resources go further. I guess most people don't want to hear or say that we shouldn't all just have as many kids as we want, but that's the plain truth. There's an absolute limit to what this planet can produce, and we certainly don't need to reach or exceed that limit.

Corn-based Ethanol opposition growing

Many of the people in opposition to corn-based ethanol do make good points. But it is not a good point that corn-based ethanol makes grain for cattle too expensive. Feeding cattle corn often requires that the animals be drugged! Nor is the "but ethanol is only profitable because of government subsidies" argument worth very much. Yes, it's not as profitable as gasoline is yet, but it's kind of funny that nobody mentions that oil receives more in subsidies (by not being taxed) than ethanol does.

There are two criticisms that are very valid though. One of thme is that while we subsidize ethanol we don't subsidize other forms of renewable energy. Solar power is slowly but surely growing into its own, and if this South African technology is real, we're already at the point to replace coal power plants with photovoltaic cells on all our houses. It's something we should definitely be funding.

The other real criticism is that a corn ethanol is also a means to get a big chunk of change poured into midwest states that primarily produce corn. No doubt some politicians are already lining their pockets with money from the ethanol industry or federal earmarks. I'm not one who thinks that we need to allow some irrationality and corruption as long as it's for the greater good. No, we need to make sure it's not happening. End the tariffs on sugarcane ethanol produced in Brazil and we have a good start. We need to embrace the most environmentally friendly and fiscally responsible green energy we can. That means no stacking the deck.

I don't know if "cellulosic" ethanol is really feasible or if it's a pipe dream, but I'm hoping it's a realistic goal. If so, then the corn ethanol debate will fade away naturally while we switch over to other forms of ethanol. I just hope people like the rancher mentioned in the article don't put their own agenda ahead of what's best for all of America.

More non-election stuff- Ethanol update

Just been wanting to throw this out to show the unstoppable march of ethanol.

A manure-powered ethanol plant in Texas, out near Amarillo. This is by Panda, mentioned in that worthless Observer article.

Ethanol has been talked to death, yeah, but I just want to mention some of these benefits again, especially this:

The new plant will be unlike any other plant in the country by reusing one of Hereford's most plentiful natural resources, almost a billion pounds of cattle manure.

"The Hereford area is like the Saudi Arabia of manure," said Todd Carter, President of Panda Energy, the Dallas-based company building the plant.

The essence of his plan is that ethanol refining process requires intense heat normally generated with expensive natural gas. But in Hereford, instead of gas they will fire up a limitless and free supply of manure. That means Panda will realize a huge savings.

I can hardly imagine oil competing with that.

Dallas Observer article full of crap

You may recall that I like to read the Dallas Observer, our alternative newspaper for the area, for its often revealing and insightful articles on local issues that otherwise would never get covered. Some examples of times we've talked about and Observer article are here, here, and here. Of course that's not to say I'm an uncritical fan. I had a real problem with the article by Andrea Grimes about the adoption of a Cherokee child by non-Indian parents. Not the adoption, mind you, just the views espoused in the article.

But I never expected this utter travesty of journalism from the Dallas Observer. "Corndoggle" is the cover story of the latest issue, and it is a sad day when my favorite scandal rag turns into a free advertisement for big oil.

The subject of the article is that there are drawbacks, some significant, with the current generation of technology that produces corn-based ethanol (soy-based bio-diesel is also touched upon). That alone isn't what pisses me off. I'll be the first to tell you that this technology is no magic bullet: the problem is our level of energy consumption, which no method of production in the world can solve. The US is using so much energy (and still growing), that we use oil by the tens of millions of barrels a day! It's just not sustainable. But ethanol won't change how much energy we consume, it'll only change where we get it from. My argument has always been that we need to reduce the amount of energy we use first and then find environmentally friendly solutions to problem. Although I'd be happy if we did both at the same time.

I do suggest you read the article for yourself. I'm not going to rebut it point by point. My problem is that it is generally misleading. Let me raise two over-arching points in a general rebuttal. This writer repeatedly mentions that bio-fuels would not be profitable minus government subsidies. I just want to mention that oil gets subsidies as well, and have you seen their profits lately? From the Union of Concerned Scientists website:

Government directly subsidizes oil consumption through preferential treatment in tax codes. A multitude of federal corporate income tax credits and deductions results in an effective income tax rate of 11% for the oil industry, compared to the non-oil industry average of 18%. If the oil industry paid the industrywide average tax rate (including oil) of 17%, they would have paid an additional $2.0 billion in 1991. Our results are consistent with a report by the Alliance to Save Energy that estimated the benefits of individual federal corporate income tax provisions. Their results showed that in 1989 preferential treatment yielded $1.8 billion to $4.6 billion in individual income tax benefits to the oil industry (Koplow, 1993).

Hardly seems like fair comparison to me to talk about the unsubsidized cost of ethanol vs. the subsidized cost of oil. Oh, by the way, what do you want to bet that we won't be fighting any wars in the Midwest over corn like we're fighting a war in the Middle East for oil? And what do you think about the cost of oil if you add that in? Do you like the price now?

Here's the other problem I have in general with the article: the writer talks about the pollution from biofuels as if it could be equal to gasoline. Of course, that's only in specific circumstances, not in all cases, and it doesn't count the pollution involved in oil drilling and refinement. But of course, the writer is either too stupid or too biased to make a fair comparison.

There is something in this article that makes me so mad I just want to burn a copy of the Observer. It's the fact that this writer, this buffoon, includes quotes from right-wing advocacy groups and calls them "think-tanks" without disclosing who they are and what they do (and where they get their money from). Namely, the National Center for Policy Analysis and the American Enterprise Institute. Let's see what the People for the American Way have to say about them.

National Center for Policy Analysis

12655 North Central Expressway, Suite 720
Dallas, TX 75243-1739
www.ncpa.org

Established: 1983
President/Executive Director: John C. Goodman
Finances: $5,237,217 (total expenditures in 2001)
Employees: 22
Affiliations: NCPA is a member of the State Policy Network, a network of national and local right-wing think tanks, and of townhall.com, a right-wing internet portal created by the Heritage Foundation.
Publications: NCPA sponsors two of its own syndicated columnists: Pete du Pont (Scripps Howard) and Bruce Bartlett (Creators Syndicate). Bartlett's column appears under contract twice a week in the Washington Times and in the Detroit News.

Uh huh. How about the American Enterprise Institute?

American Enterprise Institute

The American Enterprise Institute for Public Policy Research (AEI) is one of the oldest and most influential of the pro-business right-wing think tanks. It promotes the advancement of free enterprise capitalism, and has been extremely successful in placing its people in influential governmental positions, particularly in the Bush Administration. AEI has been described as one of the country's main bastions of neoconservatism.

American Enterprise Institute
1150 Seventeenth Street NW
Washington, DC 20036
Website: www.aei.org

Established: 1943
President/Executive Director: Christopher DeMuth
Finances: $24,934,545 (2003 income)
Employees: more than 50 resident scholars and fellows
Board of Trustees: Chairman Bruce Kovner (Caxton Associations, LLC); Vice Chair Lee R. Raymond (Exxon Mobil Corporation); Treasurer Tully M. Friedman (Friedman, Fleischer, & Lowe LLC); Gordon M. Binder (Coastview Capital, LLC); Harlan Crow (Crow Holdings); Christopher DeMuth (American Enterprise Institute); Morton H. Fleischer (Spirit Finance Corp.); Christopher B. Galvin (Motorola); Raymond V. Gilmartin (Merck & Co.); Harvey Golub (American Express Co.); Robert F. Greenhill (Greenhill & Co., LLC) ; Roger Hertog (Alliance Capital Management Corporation); Martin M. Koffel (URS Corporation); John A. Luke, Jr. (MeadWestvaco Corp.); L. Ben Lytle (Anthem, Inc.); Alex Mandl (Gemplus International); Robert A. Pritzker (Colson Associates, Inc.); J. Joe Ricketts (Ameritrade Holding Corporation); Kevin B. Rollins (Dell, Inc.); John W. Rowe (Exelon Corp.); Edward B. Rust, Jr. (State Farm Insurance Co.); William S. Stavropoulos (Dow Chemical Co.); Wilson H. Taylor (CIGNA Corp.); Marilyn Ware (American Water); James Q. Wilson (Pepperdine University)
Publications: Monthly newsletter, dozens of books and hundreds of articles and reports each year, and a glossy policy magazine, The American Enterprise.

Yeah. You think they might have a reason for badmouthing biofuels? In case you didn't read through all that (shame on you), look: Vice Chair Lee R. Raymond (Exxon Mobil Corporation). What does that say to you?

Look, I'm not saying big food doesn't have their hands in this too. I mean, come on, I know Con Agra is probably seeing a few billion more dollars in their hands from corn-based ethanol, not to mention manure-powered ethanol plants. And this isn't a perfect technology. Instead of encouraging feed lots, we need to discourage them. But that's a lot of manure anyway, and we might as well make energy from it.

That doesn't mean Mark Stuertz is right in his closing paragraph:

The upshot? Fossil fuels will in all likelihood be our most significant fuel source by far for a long time, at least through the next century. No plausible combination of alternative fuels or efficiency gains can substitute in any significance for projected oil consumption growth in the foreseeable future—at least not without onerous taxes and police state tactics. The potential alternatives may be exciting and numerous, but the challenges and compromises they encumber are daunting.

"No plausible combination"? What, ethanol won't continue to scientifically advance, just like petroleum did? And what's this about "onerous taxes"? We have 140,000 soldiers in Iraq! How do we pay for that, with tooth-fairy money? Hell no, that's our tax dollars at work, and by god it is my tax dollars because I pay my taxes unlike the oil companies that get corporate tax breaks! And "police state" tactics my ass; is a Democratic, pro-energy President going to have the NSA wire-tapping us if we don't buy flex-fuel cars? Stuertz, lay off the hyperbole.

I expect better than this from the Observer.

Gas prices down!

I'm sure everyone has noticed (thankfully) the falling price of gasoline around the country. There are even places selling gas for less than $2 a gallon, something we haven't seen in I don't know how long. Sometime before Katrina, at least. Unlike others, I was fortunate that I never paid more than $3 a gallon (at least not in Texas), but most places were sitting right under it for a long time. Finally the summer season is almost over, which always means reduced prices for gas, as well as the relative stability of the supply right now. Oh, and I don't subscribe to the idea that this has anything to do with elections right now. I know Bush and Cheney and a bunch of others are oil guys, but I don't think that means they can manipulate the entire market like that.

Before we get too excited, though, the prices we're seeing now may already be the bottom of the slump. Energy prices tend to increase again in winter, and OPEC has decided to cut back on production. Despite that caveat however, people might be wondering why, if gas is always going to come back to acceptable prices (if $2.50 is an acceptable price), they should worry about things like hybrid cars or ethanol. Well, keep in mind two big factors: India and China. Demand in those countries is already starting to outstrip supply. You might say there's enough oil if we just found it. Is there? Most scientists don't believe that. And to that you might say that's not our problem. Except that it really is. You see, in case you hadn't heard we get our oil from a bunch of people who aren't friendly to us. The only reason they work with us is because for one, we're powerful enough to make them afraid of crossing us and for two, we're rich enough to make it worth their while. If either of those things change, expect to see more oil being earmarked for China and Indian (read my post about Venezuela's relations with China). And then watch as prices rise sky high.

Point being, don't get distracted and think the problem has gone away. It's a temporary remission. Besides which, we're still better off with fuels that don't pollute as much and don't make us dependent on third-world countries that don't like us. Ethanol, bio-diesel, methane powered plants, etc, etc. Keep demanding change.

And now for something completely different

Pardon my recent absence from posting (gosh, all of six days!), but I've been rather busy with school and work recently. However, I shall take a brief break to point out some good reading. I came across an article on Wired about biofuels. It's written by a venture capitalist from California. He's discussing, in particular, a plant which uses cattle manure and corn to produce ethanol, a system which is actually both productive and more environmentally friendly (although of course one can debate the wisdom of our current system of corn and cattle monocultures).

It may look like a typical, if huge, cattle feedlot – but for the glittering white four-story structure below that resembles the Centre Pompidou in Paris. Indeed, until recently this operation just off Mead’s County Road 10 was not unlike any other finishing ground for Nebraska’s beef cattle: a last stop before the abattoir. But starting in November, Oscar Mayer will no longer be the marquee product here. A company called E3 Biofuels is about to fire up the most energy-efficient corn ethanol facility in the country: a $75 million state-of the-art biorefinery and feedlot capable of producing 25 million gallons of ethanol a year. What’s more, it will run on methane gas produced from cow manure. The super-efficient operation capitalizes on a closed loop of resources available here on the prairie – cattle (fed on corn), manure (from the cows), and corn (fed into the ethanol distiller). The output: a potential gusher of renewable, energy-efficient transportation fuel.

Sounds good. But here's the clincher:

E3 Biofuels achieves what’s known as a positive energy balance. For every BTU of energy used to run the ethanol plant, five BTUs are produced. A typical corn ethanol plant produces 1.3 to 1.8 BTUs for every BTU of fossil fuel input, including the energy required to grow the corn. (Gasoline has half the efficiency of corn ethanol, producing 0.8 BTUs for every BTU input.)

So to those who think that biofuels are a fad: you better hedge your bets folks, because when we can produce enough biofuel to replace gasoline, that's exactly what's going to happen. I really do suggest you take the time to read the full article.

Ethanol=Alcohol

Taking a page from the Russian's book, scientists are now able to turn ethanol fuel into food-grade (that is, drinkable) alcohol. It comes it at a whopping 190-proof too. According to the designer of the process it "tastes just like vodka". Isn't that special?

Anyway, as he points out, it's to give investors another reason to take a chance on ethanol plants now and to give those plants a backup source of revenue when ethanol becomes the dominant fuel (because then there'll be hundreds or thousands of these plants all doing the same thing).

[...]While the demand for fuel ethanol could wane if the automotive industry embraces other technology, "the demand for liquor and mouthwashes and cough syrups will always be there," said Hans van Leeuwen, a civil, construction and environmental engineering professor who is working with Koziel on the project.

And of course, is there ever not a market for something that makes people drunk?

Alternative energy going mainstream

Long-time readers will remember that we advocate alternative energies here on TWM. At least to me, our dependence on foreign oil plus our wanton pollution are two of the most pressing problems our generation faces. Alternative energy is no longer an environementalist's dream, and that, coupled with our current and conitinuing problems with gasoline means we are seeing the first steps towards a future free of gasoline taking place now. Unfortunately not everyone knows this is going on, but I'm going to correct that. Alternative energy is the future, so take a look.

This first article is about a small start-up company that is going into business making industrial engines that use alternative fuels.

ALGONA, Iowa -- While much of the world fumes over escalating fuel prices, a small company in north central Iowa is quietly hoping to make gasoline obsolete as an engine fuel.

Research at the Hydrogen Engine Center is done in an early 1900s red brick armory at the Kossuth County fairgrounds.

There, a clean six-cylinder engine that looks like it could have been pulled from a Ford pickup has been running for 110 hours, not quite half the 300 hours it must continuously run for certification. The company, led by a retired Ford Motor engineer, hopes to meet Environmental Protection Agency automotive 2007 emission standards.

These guys are planning to move into the market that the Big Three are moving out of.

Ford, General Motors and Chrysler have dropped industrial engine production as they've cut costs, leaving what Hollinger said is a ready-made market for his fledgling company.

Now why can this company make money on these engines while the Big Three can't? I don't know, you tell me. But however it is, it seems they can and will. They're looking at a huge market to move into. As gas prices rise and rise (and as they are projected to keep rising indefinitely), companies that use a large number of these kinds of engines stand to spend millions or billions of dollars on fuel alone. Wouldn't they like it if they could use fuels that cost half as much? Apparently so!

The company said American Airlines alone has 9,500 vehicles likely to be converted to alternative fuels over the next decade.

American Airlines has 9,500 vehicles. How many trucks does the US Postal Service own, or UPS or Fedex? Think of all those gallons of fuel. Millions a day, at least. Hydrogen fuel may not be the answer for most cars and trucks however. There are some problems with it right now that make it not as cost-effective as gas.

While the engines drive a revenue stream for the company, engineers are working to improve the technology of engines that run on hydrogen and other clean fuels. Bob Mendlesky, another retired Ford engineer, light ups when he describes the potential for the engines his shop is developing.

He said there are obstacles to making cars powered with hydrogen-fueled internal combustion engines. To carry enough hydrogen, the fuel tank would have to be under extremely high pressure, he said. In addition, tanks made to that specification cost as much as the engine to power the car.

Hydrogen technology is better suited for generator applications and for industrial uses at its current stage of development, he said.

Not to worry though, they have ideas for cars too.

A better solution may be engines that run on ammonia, Hollinger said.

Development of ammonia as a fuel must include ways to improve its combustibility. Ammonia does not readily spark like other fuels, but Hollinger is determined to overcome some of the obstacles.

He expresses doubts about making that one work well, however. On the other hand, ethanol is really taking off. As many of you may have noticed (at least in Texas), we are using ethanol as an additive to gasoline.

In signs that big-time players are betting on ethanol's future, Illinois-based agribusiness giant Archer Daniels Midland Co. recently announced a large expansion, while car makers are increasing their commitment. General Motors Corp. says it will manufacture 400,000 more flex-fuel vehicles, which will join more than 5 million on the road.

The mixture Texas and other states are using now is 10% ethanol to 90% gasoline. Flex-Fuel vehicles can use a blend up to 85% ethanol. And what's the market incentive?

At a gas station in Hiawatha, outside Cedar Rapids, an ethanol-infused gallon of 89 octane premium gas recently cost $2.69, 10 cents a gallon cheaper than the weaker 87 octane regular.

This is no temporary bubble, and people are buying into it like nobody's business.

Two years ago, it took less than three weeks to raise about $20 million from 472 investors for the Goldfield plant in central Iowa. The average investment was $47,000, and two of every three dollars came from within 40 miles, said general manager Brad Davis.

Recently, the money has started arriving even faster.

When Horan and his partners sought $20 million for each of three new biodiesel plants, no request took longer than 10 days to fulfill. In one case, the offer was fully subscribed in eight days and the organizers sent $2.5 million back. Horan said banks have been willing to lend large sums with no collateral other than the refinery itself.

There's a lot of positive stuff in this article. As we hoped, this is turning out to be a movement of the people, not just big companies. Americans really want this to work, and are putting their own money in. The corn producing states will start take some of that money that goes overseas now, and it will be put back in local economies. Can you imagine if the tens of billions of dollars we spent on gas just went back into the US? And long term, this will shatter the dynamic of the rich oil dynasties overseas as fuel begins to be produced by the world's grain producers. The only limiting factor is how much corn we can grow (which presents a problem, but more on that later).

Not only the corn, but the cellulose of the stalks themselves is potential fuel, because there's another process that makes use of those. Although production costs are not competitive at the moment, they could be (and almost certainly will be). This fuel can come from almost any cellulose-containing plant waste. If that's not a winner, I don't know what is!

Of course we've mentioned bio-diesel before, and it's part of this revolution. As gas' price and availability (lack of) makes it a less and less attractive fuel, these alternative fuels are just going to keep getting more popular. In fact, Cincinnati is using a 50/50 blend in their transit buses, and it's actually costing them less than regular diesel (because of pollution credit trading).

Metro - which uses about 3.6 million gallons of fuel a year - has a contract to buy biodiesel fuel at about $1 less than market rates by passing an IRS blender credit on to Peter Cremer, according to Sallie Hilvers, spokesperson for Metro. Biodiesel fuel is more expensive than regular diesel fuel on the market, but Metro's savings makes it cheaper.

Even with these steps forward, we're a long ways from living in a pollution-free country. It's going to be a long time before all the old fossil-fuel burners are off the road and we have clean coal plants, but it's nice to see that something is happening. Maybe it's just me, but I certainly wouldn't mind driving a hybrid car that used ethanol or bio-diesel for fuel. Imagine getting 80 mpg, and only paying $1 per gallon for the 5 or 6 gallons of fuel you do need. I'll insist that people shouldn't be driving wasteful SUVs until the end of my days, but if by the time I retire most people are driving cars like that, I'll be happy.