Distribution Bottleneck Causes Ethanol Glut

Robert Farago
by Robert Farago

No good deed (or government subsidy) goes unpunished. The New York Times reports what we surmised many moons ago: without a national network of ethanol-compatible pipelines, the corn-based fuel can't be distributed in sufficient quantities to impact America's dependence on Arab-sourced fuel. In other words, trucks and trains aren't getting it done. Add in the large number of E85 plants coming on stream and the rising price of corn and there you it: expensive raw materials, a transportation bottleneck AND oversupply leading to falling prices. Over the last two years, the price of ethanol has slumped form two bucks a gallon to $1.55. At least the ethanol industry can rely on their friends in Congress to prop-up demand through "conservation legislation." For now. Aaron Brady, a director at the consulting firm Cambridge Energy Research Associates, warns that "unintended consequences" may hurt popular support for home-grown gas. He's talking pressure on corn and other food prices, water shortages, and soil and fertilizer runoff. Without Washington's support for ethanol, what then?

Robert Farago
Robert Farago

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  • VLAD VLAD on Oct 01, 2007

    Hey, the tax subsidies have to keep rolling in until the primary elections are a done deal. If the garbage fuel causes mechanical damage it helps the economy. The beat goes on ........

  • Emro Emro on Oct 01, 2007

    "lprocter1982 : October 1st, 2007 at 10:15 am Actually, there are a great many stations in Canada that have some ethanol in the fuel. Indeed, I believe Ontario has passed legislation requiring 10% ethanol in all gasoline." you're right, E5 or E10 is common in Canada... I was referring to E85

  • BurlHaigwoodCFDC BurlHaigwoodCFDC on Oct 02, 2007

    Another typical myopic anti-ethanol article having the unintended consequence of doing the market share protection dirty work of the oil industry. How can you tell? The story lacks any objective context and perspective about the real issue facing our country – the impact of imported oil caused by the 100 year old stranglehold on the “gasoline only” market place. If you want to address the truth about ethanol, first understand the truth about oil, which is why we have ethanol (Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy by Matthew R. Simmons) We are at war in the region of the world that has the majority of the world’s proven oil reserves. Even Alan Greenspan publicly admits this 60 year old protect the Persian Gulf at all costs policy (up to $600 billion this year), which has openly been discussed by DOD since the 1940’s (Blood and Oil: The Dangers and Consequences of America’s Growing Dependence on Imported Petroleum, by Michael Klare). American children are dying today from bullets in a war over oil, which pales in comparison to some hype about the possibility or risk of hunger one day from ethanol production. Consider it took the world’s top scientists 16 years to prove, beyond the reasonable reach of the oil industry, that global warming was fossil fuel induced (The End of Oil: On the Edge of a Perilous New World, by Paul Roberts). World crude oil prices set another record last week of $80+ per barrel which has a dramatic impact on all commodities – especially in the poorer regions of the world. Oil is making a lot of people rich, and many more go hungry -- today. The United States has 2% of the world’s proven oil reserves and relies on gasoline for 98% of its transportation. People need to spend more of their time and creative energies coming up with solutions instead of providing knee jerk critic reactions to those fighting to make a change. There is a consensus and a sense of urgency from the White House to Congress and growing majority of leaders in this country to change status quo. The world is not flat; ethanol is not all that bad. It is progress in the face of a much bigger problem that is being ignored – oil (Beyond Oil: The View from Herbert's Peak, by Kenneth S. Deffeyes). We need to evolve our thinking and evolve from oil. Get the all the facts with the context, Google Ethanol Fact Book. Burl Haigwood CFDC

  • Fallout11 Fallout11 on Oct 02, 2007

    If all the arable land (450,000 million acres) in the US were planted in corn that was then in turn converted to ethanol, we still could not displace even a fraction (15%) of the 20 million barrels of crude oil consumed in this country every single day. Volumetrically, that is a cube nearly 3.5 miles on a side. Nice try. We do need to evolve away from the diminishing resource that is oil. We are, as the president says, "addicted" to it. But that means cutting consumption and invested in other ways of living (example: electric trains), not attempting to substitute yet another drug to fuel our habit.