Archive for the 'FAQ' Category

“Food vs Fuel” Argument is False

Wednesday, April 9th, 2008

Here is some interesting data that shows that the food vs fuel argument is false.

 
2002
2006
2007
2015 (Projected)
Harvested corn
acres & yield
69.3M
(129.3 bu/A)
70.6M
(149.1 bu/A)
86.5M
(151.1 bu/A)
85.0M
(180 bu/A)
Total Corn Supply
Available
(prod = carry in)
10,573 Mbu
12,512 Mbu
14,393 Mbu
17,232 Mbu
Ethanol per Acre
350 gal/A
404 gal/A
435 gal/A
575 gal/A
Ethanol produced
2.96B gal
5.8B gal
8.3B gal
15.3B gal
Corn used for
ethanol
1,093 M bu
(10%)
2129 M bu
(17%)
3010 M bu
(21%)
4,695 M bu
(27%)
Corn Supply
(Less Used for Ethanol)
DDG Disp (M bu eq)
Total
9,480
189
9,669 M bu
10,383
515
10,898 M bu
11,383
792
12,175 M bu
12,537
1,452
13,989 M bu

 

Note the bottom line. AFTER corn crop removal for ethanol production the US produced a net of 9.7 million bushels in 2002, 10.4 million bushels in 2006, and 12.2 million bushels in 2007. 

Thus despite the growth of the corn ethanol industry (or actually because of it, as I’ll explain below) the net corn food product of the USA increased 17% between 2006 and 2007, and 26% since 2002. Overall, US farm exports are up 23%.

The reason why this is so is because agriculture is not a zero sum game. Only about 30% of US arable land is actually being farmed (it’s more like 15% in the third world). As a result of the ethanol program, the price received by farmers increased over the past year from $3.50/bushel to $5 per bushel. (There are 56 pounds of corn in a bushel – that’s actual grain, not corn on the cob. So $5/bu corn is $0.09/lb). By increasing the price the farmer gets from $0.07/lb to $0.09/lb, the program caused a great increase in the amount grown, both by increasing acreage and intensity of effort, and thus yield. This puts more corn on the market, and actually acts as a factor to decrease the price that grain merchants can charge for the corn, since they need to sell it all. (Adam Smith discusses this very issue in The Wealth of Nations.)

However, the retail price of corn, as well as all other food commodities, is being driven up an average of 4% by increased fuel prices, which are up 40% this year, as well as increased demand from China and India. The increased fuel prices affect retail food prices by increasing the price of production (of both agricultural products and especially fisheries), transport, wages, and packaging, which are the majority of cost of retail food. (At $5/bu, a $2.50 box of cornflakes, which contains 15 oz or corn, contains corn that cost 8 cents when bought from the farmer.

Robert Zubrin
author “Energy Victory

Oil demand: Why is the transportation sector key?

Thursday, September 6th, 2007

The United States consumes 20.1 million barrels of oil per day, 69 percent of which is used for transportation. Nearly 85 percent of the energy consumed in the transportation sector is for highway vehicle travel, followed by air (9 percent) and rail and water (6 percent combined). Energy consumption in the transportation sector consists almost exclusively (98 percent) of petroleum fuels.

What are the economic implications of oil dependence?

Thursday, September 6th, 2007

Oil dependence has considerable economic implications. Shrinking petroleum supply and rising demand translate into higher costs. Both American consumers and the U.S. economy are already suffering from the cumulative effect of recent increases in gas prices. Fully one-quarter of the U.S. trade deficit is associated with oil imports. By some estimates, we lose 27,000 jobs for every billion dollars of additional oil imports. Serious domestic and global economic dislocation would almost certainly occur should disruption of supply take place.

For a discussion of the hidden cost of oil click here.

Why is oil dependence a national security problem?

Thursday, September 6th, 2007

The U.S. accounts for a quarter of the world’s oil demand, yet it is has a mere three percent of global oil reserves. Consequently, the U.S. is heavily – and increasingly – dependent on foreign oil. Nearly 40 percent of all U.S. oil imports come from potentially hostile or unstable regimes. And 90 percent of conventional oil reserves are in these nations including ones that are sponsors of or allied with radical Islamists who foment hatred against the US. Buying billions of dollars worth of oil provides such nations the means to continue and gather strength in their war against the free world. Further, oil supply is vulnerable to terror attacks by jihadists who wish to break our economic backbone.

Electric power generation by energy source

Thursday, July 12th, 2007

There is a common misconception that increasing the proportion of nuclear, solar, wind and so forth for power generation will reduce oil consumption. It is a misconception since today, unlike in the 1970s, very little of US electricity is generated from oil. Here is a chart of power generation by energy source:

electric power generation by energy source

Is ethanol efficient?

Thursday, November 2nd, 2006

“I heard that the energy it takes to grow and produce ethanol (gasoline for tractors, process to make ethanol, etc) makes the whole thing a farce”

“What is the net energy balance for ethanol?”

“I read that the energy return on energy invested is negative for ethanol, is that true?”

We get this question fairly often.

First off, the energy balance question is nonsensical – it always takes more primary energy to produce a unit of usable energy – that’s just a basic law of nature – whether the primary energy is a lump of coal, crude oil, or corn and the usable energy is electricity, gasoline, or ethanol respectively. The right question to ask is always, “do the economics make sense”. Below is Peter Huber’s excellent discussion of this topic.

When looking at ethanol specifically the more relevant question from an oil dependence perspective is “how much petroleum goes into making a gallon of ethanol”.  If one is looking at it from an environmental perspective, the question would be “how much coal, natural gas, and oil goes into making a gallon of ethanol.”  The total energy input is not a concern since a large part of the energy that goes in to making a gallon of ethanol is the solar energy that goes into growing the crops.

Here is a presentation of a comprehensive Argonne National Lab study that shows these numbers for corn ethanol – note especially slide #12.

Most U.S. studies, by the way, completely ignore the sugar cane equation. The numbers for sugar cane are 5 times better than for corn: Brazilian ethanol production uses practically no external energy input beyond that of the crop itself – even the electricity used the dehydrate the ethanol is generated from bagasse (the sugar cane waste.)

The biggest beater on the ethanol energy balance drum is David Pimentel of Cornell, who is addressed in a brief DOE summary of studies on this issue.

Excerpt from “Thermodynamics and Money” by Peter Huber, Forbes 10.31.05:

Energy Return on Energy Invested [Eroei] calculations now litter the energy policy debate. Time and again they’re wheeled out to explain why one form of energy just can’t win–tar sands, shale, corn, wood, wind, you name it. Even quite serious journals–Science, for example–have published pieces along these lines. Energy-based books of account have just got to show a profit. In the real world, however, investors don’t care a fig whether they earn positive Eroei. What they care about is dollar return on dollar invested. And the two aren’t the same–nowhere close–because different forms of energy command wildly different prices. Invest ten units of 10-cent energy to capture one unit of $10 energy and you lose energy but gain dollars, and Wall Street will fund you from here to Alberta.

As it happens, the people extracting oil out of tar sands today use gas from the fields themselves to power their refineries. There’s gas, too, under what has been called Alberta’s “trillion- barrel tar pit,” but it’s cheap because there’s no pipeline to deliver it to where it would be worth more. As an alternative to gas, Total S.A., the French oil giant, is thinking about building a nuclear power plant to supply heat to melt and crack the tar. But nuclear reactors extract only a minuscule fraction of the energy locked up in the nuclei of uranium atoms; all the rest gets discarded as “waste.” On Eroei logic, uranium would never be used to generate either electricity or heat. But per unit of raw stored energy, uranium is a thousand times cheaper than oil.

Greens touting the virtues of biomass as a source of energy rarely note that almost all of it is used by lumber mills burning branches and sawdust on site. No one cares how much energy the sun “invested” to grow all that waste wood. And every electric power plant, whatever it’s fueled with, runs a huge Eroei deficit, transforming five units of cheap, raw heat into two units of electrical energy. But it all works out because the market values the energy in electricity at about 30 times the energy in coal.

The economic value of energy just doesn’t depend very strongly on raw energy content as conventionally measured in British thermal units. Instead it’s determined mainly by the distance between the BTUs and where you need them, and how densely the BTUs are packed into pounds of stuff you’ve got to move, and by the quality of the technology at hand to move, concentrate, refine and burn those BTUs, and by how your neighbors feel about carbon, uranium and windmills. In this entropic universe we occupy, the production of one unit of high-grade energy always requires more than one unit of low-grade energy at the outset. There are no exceptions. Put another way, Eroei–a sophomoric form of thermodynamic accounting–is always negative and always irrelevant. “Matter-energy” constraints count for nothing. The “monetary culture” still rules.