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Big Business Finds Love for Ethanol

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A push from Congress and the White House for huge increases in biofuels such as ethanol, is prompting the oil industry to scale back its plans for refinery expansions - which could keep gasoline prices high, possibly for years to come.

With President Bush calling for a 20 percent drop in gasoline use and the Senate now debating legislation for huge increases in ethanol production, oil companies see growing uncertainty about future gasoline demand and little need to expand refineries or build new ones.

Oil industry executives no longer believe there will be the demand for gasoline over the next decade to warrant the billions of dollars in refinery expansions - as much as 10 percent increase in new refining capacity - they anticipated as recently as a year ago.

Biofuels such as ethanol and efforts to get automakers to build more fuel-efficient cars and SUVs have been portrayed as key to countering high gasoline prices, but it is likely to do little to curb costs at the pump today, or in the years ahead as refiners reduce gasoline production.

When I saw that Jeb Bush had become involved in ethanol development, it was the clincher to several hints I've seen that ethanol is being taken over by big business as its next source of abusing the public...to use biofuels as an excuse to keep oil prices high comes as no surprise.

It's time to walk when you can, bicycle when you can't walk, and generally find alternatives to the private vehicle use that has gotten us into this mess. While I am proud of the Honda Civic that gets me around, I now leave it parked whenever I can.

(This post also at http://cabdrollery.blogspot.com )

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Submitted by lambert on

You know, like Personal Health Accounts?

Because if we make ethanol out of midwestern corn, we're (a) crazy, because we're essentially making a supposed petroleum replacement out of petroleum, and (b) even crazier, because now we've yoked food prices directly to oil prices. Because in an oil shock, all the corn stocks are going to go to ethanol, and food prices will skyrocket.

So I think what America needs is Personal Food Accounts -- some way to give Republican brokers more commisions, uh, enable people to save up so they don't starve to death when oil prices spike.

No authoritarians were tortured in the writing of this post.

Submitted by [Please enter a... (not verified) on

Expanding refinery capacity would be a funny thing to do with peak oil approaching. It would only make sense to build more refineries if you thought the global supply of crude was going to expand, a extremely unlikely scenario.

Petroleum products are a huge input into modern agriculture, so the notion that biofuels will replace gasoline is simply delusional.

The thing people seem unable or unwilling to wrap their heads around is the devastatingly unfavorable ratio between the time it took to accumulate fossil energy reserves and the time it takes to consume them. Barring some technological miracle like a controlled fusion reactor, there is simply no substitute for fossil fuels.

We're going to exhaust the cream of those in the next couple generations; but there is still a lot of other sources of fossil energy: coal, tar sands, frozen methane. I don't doubt for a moment that the human race will burn these as well.

The question really, is what will be the consequences of taking all this carbon, sequestered over hundreds of millions of years, and lauching it all into the atmosphere in the space of a couple centuries?

Submitted by [Please enter a... (not verified) on

Lambert is right. This is going to really hurt when oil skyrockets and all corn raised will go to ethanol production. Something more than 80% of all prepared foods contain high fructose corn syrup. All sodas have them, even many medicines like cough syrups. Most grain supplies for the meat industry either use the syrup ( great for fattening human and animal populations to make them ready for market, the animals that is) or they contain field grade corn.

I have no idea how the food undustry will survive something like that. but I can guarantee the population will suffer.

Submitted by [Please enter a... (not verified) on

From my front door I can see about 200 acres of prime West Tennessee farmland. On the mile drive to town, maybe another 300. For the last 8 years it has been, 99.8% of it anyway, in cotton.

This year there is not a boll to be found. EVERY square foot of arable land is in corn.

And it's burning to a crisp right now. We haven't had measurable rainfall in nearly a month. Supposed to maybe get a little later tonight and into tomorrow, but it could miss us entirely and even if it doesn't, the bulk of it is currently pouring onto (and running off of) north Mississippi/central Arkansas.

Corn takes, I forget the exact number but several times as much water per plant as cotton. So they went into a water-heavy crop in a drought year, just because the price was up.

If it's this unanimous around here I'm gonna bet the same thing is happening in a lot of the midwest. If it wasn't a switch out of cotton it was out of soybeans. All in corn.

What's likely to happen?

Corn is going to flood the system come fall. I doubt that a tenth of the "proposed" ethanol stills are actually in existence yet; if the Great Ethanol Scam of the Carter years is repeated most of them never will be, on account of they are fleece jobs.

What's going to happen to prices? My bet is they drop like a rock due to oversupply. ADM isn't gonna get hurt; they have storage capacity for the factory farms they operate with hired hands rather than independent farmers. People like my neighbors the Bartholomews are gonna get creamed. Either they get miserable yields due to drought and don't have much to sell, or what they do sell doesn't bring much. Or both.

The Bartholomews are a huge family that's been here since about the time the last of the Cherokee passed through on the Trail of Tears. They can get through a bad year most likely. But there are a lot of pass-along damages: the folks who run the small cotton gins around here are gonna be in a world of hurt for one. The crop dusters who have been flying malathion for the bollweevil eradication program (okay, not gonna miss them personally mind you, but we're talkin' impact on local economy here.)

Whoever sold the cotton seed got hurt. Whoever does whatever is done with the seed that those gins pick out in the fall. An ironic benefit may go to African cotton farmers who finally don't have to compete with the absurdly subsidized American product, to the point where it was cheaper for African women to buy American cotton to run their small clothing businesses.

And all this disruption in a single year for, as commenters above point out, a product that does zip, nit, nil nothing about either personal motorcar dependency, petroleum imports, greenhouse gasses, or energy independence.

Sigh. These folks are in the business, I'm just an observer. I hope they made the right choices and I'm full of shit. I really, really hope this.

Submitted by [Please enter a... (not verified) on

My mother wanted to go visit family in south central OK this last week, and we just drove west from W TN to OKC on I-40.In Ark, the rice fields were still present, but most of the cotton fields were over-planted with corn. OK was greener than I have seen in over a decade but the drought seems to be moving eastward. In Memphis, we've never had, in tweny years, so few inches of spring rain... The thunderboomers in OK kept me awake for a few nights, they were truly terrifying.

Anyway, all I can say after this last year, global climate change exists... do something, dammit.