By on August 9, 2009

The issue is whether the proper development of an advanced biofuel industry in the United States is feasible when: (a) independent ethanol producers in the U.S. are at the mercy of volatile commodities markets for feedstock; and (b) the price of ethanol is controlled by the oil companies.

Commodity Market Volatility
The corn-to-ethanol business is highly dependent on corn prices. The price paid for corn is determined by taking the Chicago Board of Trade futures price minus the basis, which is the difference between the local cash price and the futures price. The more corn-to-ethanol contributes to our nation’s energy supplies, the more it drives up corn feedstock prices and consequently its own cost.

While increased ethanol production is partially responsible for the increase in corn prices, the main driving factors in the run-up in corn prices are: rising demand for processed foods and meat in emerging markets such as China and India, droughts and adverse weather around the world, a decrease in the responsiveness of consumers to price increases, export restrictions by many exporting countries to reduce domestic food price inflation, the declining value of the dollar, skyrocketing oil prices, and commodity market speculation.

It is important to note that excessive speculation is not necessarily driving corn prices above fundamental values. Speculation can only be considered “excessive” relative to the level of hedging activity in the market.

The government’s announcement that it would resurvey corn acreage in several U.S. states launched a rally in Chicago Board of Trade corn on July 23, 2009, giving life to a market that appeared to be sinking toward $3 a bushel. September corn ended up 19 cents to $3.27 a bushel and December corn ended up 19 1/2 cents to $3.38 3/4 a bushel. Traders see the market moving toward the $3.50-$3.75 a bushel range in the December contract. Ethanol futures were also higher. August ethanol ended up $0.065 to $1.597 a gallon and September ethanol ended up $0.064 to $1.555.

Dr. David J. Peters, Assistant Professor of Sociology – College of Agriculture and Life Sciences at Iowa State University, has developed a calculator to determine the long-term economic viability of proposed ethanol plants. Dr. Peters was surprised to learn how sensitive the bottom line is to small changes in corn and ethanol prices.

According to Dr. Peters, a typical 100 MGY corn ethanol plant built in 2005 (financing 60 percent of its capital costs at 8 percent interest per annum for 10 years, with debt and depreciation costs of $0.20 per gallon of ethanol produced, and labor and taxes at a cost of $0.06 per gallon) will lose money in the current market:

At $3.25 corn, the ethanol break even price is $1.76 per gallon.
At $3.50 corn, the ethanol break even price is $1.82 per gallon.
At $3.75 corn, the ethanol break even price is $1.88 per gallon.
At $4.00 corn, the ethanol break even price is $1.94 per gallon.

Oil Company Monopoly
U.S. oil companies are using ethanol merely as a blending component in gasoline (in the form of E10) rather than a true alternative transportation fuel (in the form of E85). The major obstacle to widespread ethanol usage continues to be the lack of fueling infrastructure.

Only 2,175 of the 161,768 retail gasoline stations in the United States (1.3%) offer E85. These E85 fueling stations are located primarily in the Midwest. According to the U.S. Department of Energy, each 2% increment of U.S. market share growth for E85 represents approximately 3 billion gallons per year of additional ethanol demand.

While alleging an oversupply of corn ethanol, U.S. oil companies, due to a loophole in the Caribbean Basin Initiative, are currently allowed to import thousands of barrels of advanced biofuel (“non-corn ethanol”) every month without having to pay the 54-cent-per-gallon tariff.

Oil companies, or affiliates of oil companies, currently have a monopoly on blending fuel ethanol with unblended gasoline. Many states, e.g., Florida, allow only oil companies and their affiliates to blend and receive the 45 cents-per-gallon blender’s tax credit.

This monopoly impairs fair and healthy competition in the marketing of ethanol blends. Independent U.S. ethanol producers have the legal right, and must be assured the availability of unblended gasoline, to blend fuel ethanol and unblended gasoline to receive the blender’s tax credit and be cost-competitive.

In short, independent U.S. ethanol producers do not have bargaining power on either end of the supply chain. Corn ethanol producers are price takers. A comprehensive advanced biofuel industry development initiative is required to disrupt the status quo and establish fair and healthy competition in the marketing of advanced biofuel blends in our nation.

The Louisiana Solution
Louisiana is the first state to enact alternative transportation fuel legislation that includes a variable blending pump pilot program and a hydrous advanced biofuel pilot program. On June 21, 2008, Louisiana Governor Bobby Jindal signed into law the Advanced Biofuel Industry Development Initiative (“Act 382”). Act 382, the most comprehensive and far-reaching state legislation in the U.S. enacted to develop a statewide advanced biofuel industry, is based upon the “Field-to-Pump” strategy.

It is the cost of the feedstock which ultimately determines the economic feasibility of an ethanol processing facility. “Field-to-Pump” does not allow an advanced biofuel producer to fall victim to rising feedstock costs. Non-corn feedstock is acquired under the terms of an agreement analogous to an oil & gas lease. It is not purchased as a commodity.

A link exists between the cost of feedstock and ethanol market conditions. Farmers/landowners receive a lease payment for their acreage and a royalty payment based on a percentage of the gross revenue generated from the sale of advanced biofuel. “Field-to-Pump” marks the first time that farmers/landowners share risk-free in the profits realized from the sale of value-added products made from their crops.

Smaller is better. “Field-to-Pump” establishes the first commercially viable large-scale decentralized network of small advanced biofuel manufacturing facilities (“SABMFs”) in the United States capable of operating 210 days out of the year. Each SABMF has a production capacity of 5 MGY.

As with most industrial processes, large ethanol plants typically enjoy better process efficiencies and economies of scale when compared to smaller plants. However, large ethanol plants face greater supply risk than smaller plants. Each SABMF utilizes feedstock from acreage adjacent to the facility. The distributed nature of a SABMF network reduces feedstock supply risk, does not burden local water supplies and provides broad-based economic development. The sweet sorghum bagasse is used for the production of steam. Vinasse, the left over liquid after alcohol is removed, contains nutrients such as nitrogen, potash, phosphate, sucrose, and yeast. The vinasse is applied to the sweet sorghum acreage as a fertilizer.

Act 382 focuses on growing ethanol demand beyond the 10% blend market. Each SABMF produces advanced biofuel, transports the advanced biofuel by tanker trucks to its storage tanks at its local gas stations and, via blending pumps, blends the advanced biofuel with unblended gasoline to offer its customers a choice of E10, E20, E30 and E85. Each SABMF captures the blender’s tax credit of 45-cents-per-gallon to guarantee sufficient royalty payments to its farmers/landowners and be cost-competitive.

In the U.S., the primary method for blending ethanol into gasoline is splash blending. The ethanol is “splashed” into the gasoline either in a tanker truck or sometimes into a storage tank of a retail station. The inaccuracy and manipulation of splash blending may be eliminated by precisely blending the advanced biofuel and unblended gasoline at the point of consumption, i.e., the point where the consumer puts E10, E20, E30 or E85 into his or her vehicle.

A variable blending pump ensures the consumer that E10 means the fuel entering the fuel tank of the consumer’s vehicle is 10 percent ethanol (rather than the current arbitrary range of 4 percent ethanol to at least 24% ethanol that the splash blending method provides) and 90% gasoline. Moreover, a recent study, co-sponsored by the U.S. Department of Energy and the American Coalition for Ethanol, found E20 and E30 ethanol blends outperform unleaded gasoline in fuel economy tests for certain motor vehicles.

Hydrous advanced biofuel, which eliminates the need for the costly hydrous-to-anhydrous dehydration processing step, results in an energy savings of 35% during processing, a 4% product volume increase, higher mileage per gallon, a cleaner engine interior, and a reduction in greenhouse gas emissions.

On February 24, 2009, the U.S. EPA granted a first-of-its-kind waiver for the purpose of testing hydrous E10, E20, E30 & E85 ethanol blends in non-flex-fuel vehicles and flex-fuel vehicles in Louisiana. Under the test program, variable blending pumps, not splash blending, will be used to precisely dispense hydrous ethanol blends of E10, E20, E30, and E85 to test vehicles for the purpose of testing for blend optimization with respect to fuel economy, engine emissions, and vehicle drivability.

The Louisiana Department of Agriculture & Forestry Division of Weights and Measures will conduct the vehicle drivability phase of the test program. Fuel economy and engine emissions testing will be conducted by Louisiana State University in Baton Rouge, Louisiana. Sixty vehicles will be involved in the test program which will last for a period of 15 months.

Louisiana Act 382 ensures: (a) ethanol producers in the U.S. are no longer at the mercy of volatile commodities markets for feedstock; (b) farmers/landowners share risk-free in the profits realized from the sale of value-added products made from their crops (c) the price of ethanol is no longer controlled by the oil companies; (d) feedstock supply risk, the burden on local water supplies, and the amount of energy necessary to process advanced biofuel are minimized; and (e) rural development and job creation are maximized.

Furthermore, due to the advantages of producing advanced biofuel from sweet sorghum juice, the use of sweet sorghum bagasse for the production of steam in the SABMF, and the energy savings of processing hydrous advanced biofuel, the Louisiana solution reduces field-to-wheel lifecycle GHG emissions by 100%.

Copyright © 2009, NewsBlaze, Republished on TTAC with the copyright owner’s permission.

Brian J. Donovan is the CEO of Renergie, Inc.

About Renergie [from the author]:

Renergie was formed on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita. Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program. Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.

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25 Comments on “E85 Boondoggle of the Day: Where There’s a Will . . ....”


  • avatar
    RedStapler

    Interesting break even analysis on a typical ethanol plant. As a member of the compression ignition club I’d like to see a similar breakdown for a bio-diesel producer.

    Corn ethanol producers are also at the mercy of their transportation carriers. Unlike gas, diesel and gasoline you can’t transport ethanol in a pipeline. Almost daily in Reno I see a unit train or large block of tank cars bringing ethanol to California.

    Right now there is plenty of excess capacity in both modes. When the economy returns to something resembling normal this will change.

  • avatar
    Daniel J. Stern

    a recent study, co-sponsored by the U.S. Department of Energy and the American Coalition for Ethanol, found E20 and E30 ethanol blends outperform unleaded gasoline in fuel economy tests

    Oh really? Huh. Neat trick, given that ethanol contains significantly less energy than gasoline per volume unit. That means to do any given amount of work, a greater volume of ethanol than gasoline must be burned, and that means more gallons of fuel to drive a particular car any given number of miles (i.e., fewer miles per gallon). No amount of political pressure or study sponsorship changes the fact that a certain amount of energy is required to do a certain amount of work.

    Specifically, gasoline contains about 115,000 BTU per U.S. gallon, LHV. Ethanol contains about 75,700 BTU per U.S. gallon, LHV. That means ethanol contains about 66% of the energy that gasoline contains.

    Therefore:
    E10 — gasoline with 10% ethanol — contains 111,070 BTU per U.S. gallon (3.4% less energy than straight gasoline; 19.3 mpg instead of 20 mpg).

    E15 — gasoline with 15% ethanol — contains 109,105 BTU per U.S. gallon (5.1% less energy than straight gasoline; 19 mpg instead of 20 mpg).

    E20 — gasoline with 20% ethanol — contains 107,140 BTU per US gallon (6.8% less energy than straight gasoline; 18.6 mpg instead of 20 mpg).

    E30 — gasoline with 30% ethanol — contains 103,210 BTU per US gallon (10.3% less energy than straight gasoline; 17.9 mpg instead of 20 mpg).

    E85 — ethanol with 15% gasoline — contains 81,595 BTU per U.S. gallon (29% less energy than straight gasoline; 14.1 mpg instead of 20 mpg).

    Certainly it’s possible to build engines optimised for ethanol, e.g. with a (much) higher compression ratio and (much) more aggressive ignition advance map; these engines can in some cases return equal or better fuel economy compared to gasoline-optimised engines, but engines optimised for ethanol to the extent of overcoming ethanol’s energy deficit cannot be operated on gasoline.

    So: no, sorry, the notion of gasoline engines giving better fuel economy when misfuelled with high blends of ethanol just doesn’t hold water. The simplest explanation, then, for this, ah, finding is that the study was sponsored by the American Coalition for Ethanol.

  • avatar
    fincar1

    This study cites lack of infrastructure as a main reason E-85 isn’t a major factor. I didn’t see anything about a lack of willing customers who don’t want to ruin their equipment with E-85.

  • avatar
    GS650G

    It’s really a shame ethanol has far less energy than gasoline. If they were the same or even close we would have some kind of workable solution. But they are not so we are left with political maneuvering along with smoke and mirrors to convince the hapless people E85 or E20 or E whatever is in their best interests when it is not.

    Maybe the real solution to energy independence for the US is not to grow fuel but to pump it out of the ground. Heaven knows we have plenty underground but the current “leadership” of the US is beholden to groups that hate cars, private transportation, and petroleum products in general.

    These idealistic dreamers can’t really do the math when it comes to energy solutions. They do not respect markets, can’t be reasoned with when it comes to the real needs of the country, and now they have power so they don’t feel like conceding any points.

    Keep it up, next year is an election year and then we’ll see.

  • avatar
    Daniel J. Stern

    @GS650G:

    These idealistic dreamers can’t really do the math when it comes to energy solutions. They do not respect markets, can’t be reasoned with when it comes to the real needs of the country, and now they have power so they don’t feel like conceding any points. Keep it up, next year is an election year and then we’ll see.

    Pffft. The ethanol brigade got just as much love from Bush, Cheney & Assoc., it was just a different flavour of smoke being blown up our bums. Think about it for a minute or three: Why do you think GM made such a big, fancy “Go Yellow!” promotional effort over E85? It might could’ve had something to do with the fact they got/get a tender, juicy, flavourful, wholly-undeserved CAFE credit for each and every E85-tolerant vehicle they produced/produce, even though absolutely everyone knew almost none of those vehicles will ever consume a drop of anything but gasoline. How do you suppose GM feels about that? Nudge, nudge. How do you think the oil industry feels about it? Wink, wink.

  • avatar
    thalter

    @GS650G

    Sorry, but we can’t drill ourselves out of this one. The US consumes about 25% of the world’s crude, but has only about 5% reserves. So any self-sufficiency solution is going to have to have at least as much conservation as extraction.

    The real reason we aren’t recovering more domestic oil is that it is not cost effective to do so. We’ve already extracted most of our easy oil. What left is tied up in shale sands and other difficult (read expensive) to extract forms. Until gas gets back to $4 per gallon or more, it simply won’t make sense to extract our own oil and sell it at a loss, when imported oil is so much cheaper.

    No one wants the US to be energy independent more than I do. I hate funding both sides of the war on terror. However, until people are willing to a) use less gas and b) pay more for it, it will be just a dream.

  • avatar
    97escort

    Oil production peaked in the United States in 1970. It is now peaking for the entire world. Those who think that drilling more holes in the ground will increase oil production do not know what they are talking about. Oil depletion never stops.

    Try drinking a glass of water with two straws and see if there is more water in the glass than drinking it with one straw. We have used about half of the oil in the earth. The last half will be harder to get out and much more expensive. Those who reject ethanol have no solutions. All they have is objections. At some point reality will hit them upside the head.

  • avatar
    Daniel J. Stern

    Those who reject ethanol have no solutions. All they have is objections. At some point reality will hit them upside the head.

    Your smugness is unwarranted; it’s based on simplistic assumptions. We do need a solution, for sure, but it’s far from clear that ethanol is the right solution, and it’s not even clear that ethanol is a sound interim solution.

  • avatar
    Aqua225

    DJStern:

    You can do exactly what you want to do with any modern fuel injected & turbocharged engine: ie., aggressively raise compression and advance the spark.

    WIth turbos, your effective compression ratio can be driven into the stratosphere, and ignition advance is merely variables in a computer program.

    The problem is: if you build a motor that has a turbo that can deliver that much boost, the street racers, will work around the E85 detection mechanism and get the same fuel delivery and boost delivery while running gas. Say bye-bye in a quarter of the usual distance for said car engine.

    To me, it seems like electric is the obvious solution. Massive amounts of torque from 0 RPM and up, awesome thermal stability, and can be built from steel and aluminum (just like a ICE).

    We just have to get our storage capacity in batteries *way* up. We could store solar for use at night, wind when the wind doesn’t blow, etc.

    It seems to me that getting off of all fossil fuels really boils down to no other technology than storage batteries. Why we continue to throw money at ethanol, GTL, or other alternative fuels, which all involve burning, is just baffling to me. We know how to store carbon fuels and burn them. If we could get off of them, plenty of them would still be left in the ground.

    I don’t “believe” in global warming, no do I have a scientific appreciation for the theory, but to me the dependence on oil should be broken for one reason, and one reason only: energy security. Until we get off oil, we will be beholden to the Middle East and all the pitfalls that entails. Our pocket books will be beholden to the whims of a few people who really hate us (but not the dollar in our pocket).

    Don’t get me wrong: I love the piston engine, but the price is now too high for the technology, both monetarily & politically.

  • avatar

    Aqua225, my worry about your scenario is that we may never have batteries that have enough energy storage per unit mass and per $ for electric cars to be anywhere near as versatile as ICE. I see modest potential for biofuels (though not corn ethanol)
    http://www.ehponline.org/docs/2008/116-6/focus-abs.html

  • avatar
    thx_zetec

    Many of these ethanol articles seem miss the big point by being lost in details.

    “the major obstacle to ethanoal is infrastrucuter”

    No, the major obstacle is that ethanol is a crappy fuel. Expensive, and give poor fuel economy. Just look at the graphic for this article – shows ethanol 19% cheaper, and this is *with* 50 cent taxpayer subsidy. Fuel economy is 25% less. So even with big subsidies costs more. Why should company invest billions for more costly fuel?

    Ethanol advocates often speak of the “petroleum monopoly”, but this is crazy. If ethanol is cheaper they’d be adopting it. In business lower costs win – these people would give their right arm to cut cost 1% let alone achieve the fantasy savings that ethanol promises.

    Ethanol is used as blending component simply because taxpayers pay for this and congress mandates it. Without taxpayer support they would simply not use it.

    As far as ethanol with water, I’m skeptical. Water is major corrosion concern. Oh yeah, I forgot, corrosion is all a oil company conspiracy.

    Of course I could be wrong – maybe ethanol realy *can* succeed without massive subsidies. I just want the ethanol lobby to release its vise like hold on the national treasury’s teat and simply compete. You have nothing to lose but all your business.

  • avatar
    agenthex

    We do need a solution, for sure, but it’s far from clear that ethanol is the right solution, and it’s not even clear that ethanol is a sound interim solution.

    If anyone just takes a look at how much oil is used daily, and how much crop/land/water is going to be needed to replace that, it’s pretty clear it’s not much of a solution at all.

    If we’re going to put money to find alternatives, why put it into something that is *worse* AND unsustainable on top of that?

  • avatar
    Aqua225

    I think that if we can’t solve the storage problem, we are a doomed nation, and we are merely in the countdown till the end.

  • avatar
    agenthex

    That’s definitely true for cars, but less so for electricity in general for stationary objects since that can be moved around pretty well in wires.

  • avatar
    Aqua225

    An explanation of my bleak prediction:

    Enviromentalism’s power against oil continues to grow, meanwhile the more we spend in the Middle East on purchasing oil, the more we fund terrorism here and abroad against our interests.

    With escalating terrorism, and resistance to technologies that use carbon as a energy input, our economy, and therefore our American way of life, will not survive. As the economy tuckers out, so does the possibility of establishing the required energy storage capabilities.

  • avatar
    agenthex

    meanwhile the more we spend in the Middle East on purchasing oil, the more we fund terrorism here and abroad against our interests.

    This tends to be an overblown problem, mostly because both the left and right in the US advocate it politically.

    Most of our oil is not from the middle east.

    The “problem” is mostly a long term one revolving around _SLOWLY BUT STEADILY INCREASING_ energy costs when your economics game assumes low costs. It’s a significant enough existential threat that we need to start addressing it now via alternatives that don’t run out as soon, and if we’re going to be spending that money anyway, might as well do it on cleaner stuff that won’t mess up the environment.

  • avatar
    Aqua225

    Agenthex:

    It doesn’t seem like the terrorism angle is promoted enough from either side to me.

    Islam in its violent form, almost died in the Middle East. Oil money brought it back to the world stage. While in truth, terrorism is only a small fraction of where oil money in M.E.is spent, a small fraction of a big enough pie, is not insignificant. And even if most of our oil is NOT sourced from the M.E., a monetarily significant portion still is, more than enough to make a fraction of the whole being spent on terrorism, a unfortunate & very real problem.

    I also agree that energy pumped out of the ground must increase in price. And as it does, that fraction of the pie to terrorism grows ever larger. Meanwhile, the very societies paying more for energy, are weakened by the increase outpay, even as terrorism grows stronger.

  • avatar
    agenthex

    It doesn’t seem like the terrorism angle is promoted enough from either side to me.

    The right likes it because it’s the great new enemy/scare tactic since the fall of the USSR (and china is on friendly terms now).

    The left likes it because it promotes the green agenda.

    There’s been what, a few significant attacks on the US in the last decades(s), and only one really large and lucky one? These guys (and their promoters on all fronts including domestic opportunists) are a joke as can be attested by the “captures” following 9-11. Many more people are effected by oddball diseases and other weirdness never cover in any news.

    The fact is the middle easterners need to sell their oil as much as we need to buy it. Their entire economies are dependent on the money. Witness the cheating in OPEC to maximize production.

    I will cover the effects of no energy during the night cycle in a different post.

    Solar isn’t the only game in town. Besides, people use more electricity when the sun’s out.

  • avatar
    Aqua225

    “The fact is the middle easterners need to sell their oil as much as we need to buy it. Their entire economies are dependent on the money. Witness the cheating in OPEC to maximize production.”

    I can agree with that comment. But I still can’t agree on the terrorist angle you’re taking.

    Look at the freedom we have given up to prevent future attacks. I’d much rather that freedom back. Maybe I have a stinted view of the freedoms given up: I have to travel occasionally for my career, and its a real pain to get on a plane, and my luggage is searched almost 100% of the time as well (the checked part, that is) because of the various electronic things I always bring along. Not that I have anything at all to hide, but I dislike people rummaging around in my personal effects. It’s detestable.

    Also, solar may not be the only game in town, but practically, its the only one that can generate even to close to the amount of power we now consume. Wind is amateur level stuff in comparison. We’ve also exploited most of our water resources in terms of hydroelectric (technically not true, but legally true in environmental issues).

    If nuclear were an option, it would be a no brainer, but here again, the environmental lobby has squeezed a major player out of the game. I really think these people won’t stop until we are back to living in the trees.

  • avatar
    agenthex

    Look at the freedom we have given up to prevent future attacks. I’d much rather that freedom back.

    It’s easy. Just ignore the “terrorists” and those that support them (like the opportunists using them as an excuse to curb our freedoms). Terrorism works on the psychology of human fear. You either learn to get over it or else let it control you as the manipulators desire.

    Also, solar may not be the only game in town, but practically, its the only one that can generate even to close to the amount of power we now consume. Wind is amateur level stuff in comparison.

    Wind is cheaper as of now. Plus there’s nuclear. You can use solar to charge the storage in cars when they’re not moving.

    It’s not going to be a problem unless solar is going to become a VERY LARGE portion of our overall energy sources, which is unlikely in the foreseeable future. And by then you can probably “pipe” electricity from place where the sun is shining because I would imagine room temperature superconductors would’ve been invented in such a rosy utopia.

  • avatar
    sutski

    “and (e) rural development and job creation are maximized.”

    I saw a guy spouting about ethanol on CNN or CNBC a few days ago. He was making out like he is saving the planet, saving the air, saving us from the A-rabs etc. etc…..”oh and my HUGE farm that is just so technologically advanced it is unbelievable will be future proof etc etc”, and when asked how many folks he employs he said……….”oh about 20 people”.

    I guess those darn newfangled GPS toting auto-run machines don’t even need labourers to work ’em anymore…

    Hmmmm worrrying if you think that insurance, finance, cars, war, construction and manufacturing to name but a few, are all following this line and don’t really need us labourers anymore either…

  • avatar
    wsn

    97escort :
    August 9th, 2009 at 4:43 pm

    We have used about half of the oil in the earth. The last half will be harder to get out and much more expensive. Those who reject ethanol have no solutions. All they have is objections. At some point reality will hit them upside the head.

    ———————————————-

    I don’t object ethanol. I object the way governments are manipulating ethanol in the favor of certain lobby groups.

    Solution? Simple, the government hands off everything. And everything will be fine.

    Oil may have peaked. It doesn’t matter. When gasoline is at $10, people will voluntarily switch to ethanol if it’s $3, or people just start to work online without commuting.

    Let energy buyers decide for themselves, we don’t need a wise Chairman to plan everything out for us.

  • avatar
    agenthex

    Let energy buyers decide for themselves, we don’t need a wise Chairman to plan everything out for us.

    There are two main logical fallacies with this statement.

    One is that just because “planning” doesn’t work in one case doesn’t mean it’s poor in all cases. If anything, proper planning instead of hoping for the best is considered to be the better option in life. Most things in society are planned one way or another, and failure to recognize this is ignorant.

    The second is that a congeries of buyers will make correct aggregate decisions, especially surround issues where standardization is beneficial. I’m currently trying to get a CableCARD to work, and it’s a reminder of how significant industry players (in this case content owners/cable providers/settop box manufacturers) freely and systematically conspired to the detriment of the uninformed consumer.

  • avatar
    Aqua225

    agenthex:

    I am going with wsn on this one, especially since you noted last night that:

    “The “problem” is mostly a long term one revolving around _SLOWLY BUT STEADILY INCREASING_ energy costs when your economics game assumes low costs.”

    In situations where the value of the specific product changes slowly (ie., the product just suddenly doesn’t become available), I think market forces will easily work.

    I also think a quick change on fuel would quickly force reconsideration as well. It’s one of those things that’s important, and market forces tend to choose well.

    A cablecard is just a obsolete piece of technology designed to keep you in front of the tube (or LCD as it were) flipping channels. What’s worse about cablecards, is even though it is a standard, you NEVER buy a cable card from one place, and use it in another. I mean, in theory, sure it will work. But from the research I did on the net a few weeks ago, most cable companies will not activate a “wild” cable card on their own network.

    Oil selected itself, and once it is gone or too expensive to purchase, alternatives will become reality. I don’t/won’t believe for a second that something as complex as energy is best planned by a central planning authority. Central authorities work fine for very short emergency situations, where the operational parameters are well defined. But anything much longer than a few years, and the authority ingrains itself into the system, such that the system cannot survive without it. Best not to refer to a central planner on something like energy, or mark my words: you will eventually regret it.

  • avatar
    agenthex

    It’s one of those things that’s important, and market forces tend to choose well.

    It may or it may not, just like being indecisive in life in general. Why leave everything to chance when being smart about it from the get go is usually better?

    I mean, in theory, sure it will work. But from the research I did on the net a few weeks ago, most cable companies will not activate a “wild” cable card on their own network.

    That’s exactly why the standard, promoted by the FCC to the benefit of consumers, failed. It failed because it was against the interests of some major players which sought to maximize inconvenience under the letter of the law, because consumer individually are uninformed about such things, so we ended up with worse technology because of it.

    The “free market” theory assumes a level of sophistication among all participants that simply does not exist and will never exist.

    I don’t/won’t believe for a second that something as complex as energy is best planned by a central planning authority.

    HA! And you don’t think the oligopolies in the energy industry don’t plan?

    The choice here is not between anarchy and central planning. The real choice is between central planners beholden to us, vs. planners looking to maximize leverage AGAINST us.

    So when their cablecard device doesn’t work, how many people try to fix it (and are technically capable) vs. just get the crap proprietary box from the cable/satellite company which happens to be great for the programming they want to sell you?

    If anything you have the equation backwards. The more complex a system is, the worse the information asymmetry between buyers and sellers, and the worse a market works.

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