National Corn Growers Association CEO Rick Tolman offered testimony in support of the national Renewable Fuels Standard during a hearing Tuesday before the House Subcommittee on Energy and Air Quality.
“This policy has been critical to the growth and economic development of rural America and has added value to our product which for so long has been priced below the cost of production,” Tolman told the subcommittee.
“Recently many critics have questioned the value and consequences of the Renewable Fuels Standard, they are quick to point to biofuels as the primary reason for global food increases,” said Tolman. “A look at the facts surrounding food prices simply doesn’t support that logic. The effects of $120 a barrel oil have far more reaching effects on consumer prices for food. Petroleum is used in virtually every step of the supply chain that begins with the farmer and ends at the consumer’s table. In fact, just 19 cents of every consumer dollar can be attributed to the actual cost of farm products.”
With a oil at (yet again!) a new record high today of $122 per barrel, would-be parents might want to think about the implications a little one will have on their pocketbooks.
The Illinois Department of Natural Resources estimates each person uses about 7,800 pounds of petroleum a year–more than 28 barrels of oil. In a lifetime, each American will use 585,000 pounds or 2,100 barrels of petroleum.
At $122 per barrel that’s $256,200 per person. Where’s all that petroleum going, you ask?
Well Little Johnny’s diapers are composed of 30 percent petroleum and if he’s like the average baby, he is going to go through nearly 6,000 diapers before being potty trained. More than 50 pounds of petroleum feedstocks are used to produce disposable diapers for Little Johnny. That’s one-fifth of a barrel per year.
By the time Little Johnny turns 10, he will have used about 730 crayons to draw and color with. Those crayons contain paraffin wax, a petroleum product.
Toothpaste, deodorant, cologne and detergents all contain petroleum products, and families buy these in abundance. Deodorant, for example, contains synthetic fragrances, of which 95 percent are made from petroleum. And if every family replaced just one 28-ounce bottle of petroleum based dish detergent with a vegetable-based product we could save 82,000 barrels of oil
Then the teen years hit and Little Johnny’s cell phone, computer and cars all gobble up petroleum in the form of plastics and fuel.
Keep in mind though, that what you can make with petroleum chemicals you can make with ethanol chemicals–and in a cleaner, greener manner.
Corn ethanol is starting to look a little bloody and battered lately – a bit like Rocky Balboa at the end of the original 1976 movie.
Like Rocky, corn ethanol has always been “a million to one shot” underdog. Like Apollo Creed, the oil industry is cocky and undefeated. The Renewable Fuels Standard is ethanol’s World Heavyweight Championship. The question now is, will Congress stand by the legislation and let ethanol go all 15 rounds, or will it end the match prematurely?
In the movie, Creed initially takes the fight lightly, but Rocky unexpectedly knocks him down in the first round and the match turns intense. Sounds a bit like what is happening here. Big Oil thought Little Ethanol was just a pushover – now they are pulling no punches in trying to knock out the underdog.
Like Rocky, the ethanol industry doesn’t expect to “win” the fight – there is no way that ethanol can replace all the imported foreign oil that we use in this country. But, this little industry is a contender and does want to survive – to help rural communities prosper and to do something to at least reduce our dependence on foreign oil.
Rocky may have ultimately lost the fight in a split decision at the end of the original film, but there were five sequels. In the second, Rocky beats the champ in the end.
Yo, Adrian! Let’s hope it doesn’t take a sequel to do it.
Paul Mulshine starts out saying, “A popular theme of mine is the idea that ethanol is better consumed in beverages than in gas tanks.”
He goes on to talk about the Absolut vodka ad controversy noting that it gives “patriotic Americans good reason to drink some other vodka.”
And if that’s not reason enough, consider this: Taste tests show Absolut doesn’t taste noticeably better than the stuff that goes into your fuel tank.
He references a 2005 vodka taste test done by Eric Asimov of the New York Times that compared 5 of the 10 best-selling unflavored vodkas in the United States and the 5 best-selling imported vodkas.
American-made Smirnoff at $13 a bottle beat them all, including Absolut.
“In the United States almost all vodka producers buy neutral spirits that have already been distilled from grain by one of several big Midwestern companies like Archer Daniels Midland,” wrote Asimov. “The neutral spirits, which are 95 percent alcohol or more, are trucked to the producers, where they are filtered, diluted and bottled.”
Yes, that’s the same Archer-Daniels Midland that makes so much of the ethanol that goes into cars. Once you distill corn into alcohol, that alcohol can go into either shot glasses or gas tanks.
Which brings us to the moral, and the headline, of the story. Drink the best and burn the rest.
Oh yeah, and Mulshine also makes this point. “The wholesale price for ethanol at the moment is about $2.50 a gallon. If you could get it at that price, dilute it with water and put it in a bottle - which is what domestic vodka makers do - the cost of the ingredients of every 750-milliliter bottle would be a mere 25 cents. You heard that right. The typical bottle of lower-shelf vodka has about 25 cents worth of vodka in it.”
And that, my friends, is why ethanol for fuel is “denatured” - or poisoned - so people can’t use it to make their own vodka at home.
Here’s an interesting item, Corn Commentarians: the 24-hour news cycle and the engagement of bloggers into that news cycle has some apparent drawbacks, including weight gain, lack of sleep and stress, among other things.
Prompted by the untimely, unexpected deaths of two prominent bloggers, a New York Times technology article, describes the downside of blogging:
A growing work force of home-office laborers and entrepreneurs, armed with computers and smartphones and wired to the hilt, are toiling under great physical and emotional stress created by the around-the-clock Internet economy that demands a constant stream of news and comment.
Other bloggers complain of weight loss or gain, sleep disorders, exhaustion and other maladies born of the nonstop strain of producing for a news and information cycle that is as always-on as the Internet.
Fuel prices up 40 percent in the last four months. Profits in the oil industry under attack on Capital Hill. Seeming lack of awarness by the oil industry of the impact of energy costs on food prices. Failure to recognize that when oil prices rise so does the cost of just about everything else. The list goes on and on. And Illinois Corn Growers Association has responded with a provacative piece on its web site.
It’s worth re-noting some of the benefits of biofuels: Merrill Lynch noted oil and gasoline prices would be about 15% higher if biofuel producers weren’t increasing their output.
Here’s a question worth mulling over: What impact an extra 15 percent increase in gasoline prices would have on food prices?
Get enlightened on the oil industry perspective on ethanol and food prices with this video of Rep. Herseth Sandlin questioning oil execs.
That’s the multi-million dollar question on the minds of lots of people right now - one that will be answered to some extent by the USDA’s first educated guess on Monday morning when the prospective plantings report is released.
Business Week did an article today about those who are eagerly anticipating the report - from livestock producers to the ethanol industry to market analysts.
Here are a couple of quotes from the article:
“Everybody is looking to see what that report is going to look like,” said Bob Dinneen, a spokesman for the Renewable Fuels Association. “Everybody is anxious, us included.”
Mindy Williamson, a spokeswoman for the Iowa Corn Growers Association, said the ethanol-fueled demand for corn has changed the dynamics.
“Before we weren’t in a demand-driven market,” she said. “Now, it’s all about demand and you have a choice about where we want to sell (corn) and who you want to sell it to. There are still other things beyond farmers’ control, like weather, but it’s a good time.”
Over at the NCGA Web site, there is an article by CEO Rick Tolman about what the economy would be like without ethanol. One study cited therein mentions that gasoline would cost 5 to 10 cents more at the pump. So, one could extrapolate, ethanol saves consumers between $7 billion and $14 billion a year in gasoline costs.
Another authority has now come out with a higher figure. Francisco Blanch, who directs commodities research and strategy at Merrill Lynch, was cited this past week in the Wall Street Journal with research that “oil and gasoline prices would be about 15 percent higher if biofuel producers weren’t increasing their output.”
Time again to pull out the old slipstick and do some math.
The U.S. Department of Energy estimates the United States will use 9.32 million barrels of motor gasoline per day in 2008. This equates to 142.9 billion gallons for the year. If the average estimated pump price is $3.21 per gallon in 2008 (according to the DOE), then a 15 percent savings is $0.48 per gallon. Comparing this over the entire U.S. gasoline usage for a year equals a national savings of $68.59 billion.
There ought to be a rule that whoever wrongly puts all the blame for higher food prices on ethanol must also credit the industry for reducing the cost of gasoline.
As someone new to agriculture, I first heard John Phipps at the recent Commodity Classic, and I was impressed by his poise, his intelligence, his humor and his broad knowledge of (and deep affection for) his primary audience.
If you are going to talk about water use, at least put it in perspective.
The hue and cry over ethanol’s water use has been led by the claim that one gallon of ethanol requires 1700 gallons of water to produce. That figure, as Ken pointed out in the previous post, counts the water used to grow the corn, most of which comes in the form of rainfall. That recurring figure of 1700 gallons, which originated in the infamous Pimentel study, continues to be bandied about by naysayers who don’t even bother to compare it to anything else. How about the fact (according to these EPA Water Trivia Facts) that one acre of growing corn actually gives off an estimated 4,000 gallons of water PER DAY in evaporation? That means that corn actually gives back more water than it uses to grow!
According to the same trivia facts, it takes 44 gallons of water to refine one gallon of crude oil (actually 1851 gallons to refine one barrel, which is 42 gallons). That could be legitimately compared to the 3-4 gallons of water it takes to process corn into a gallon of ethanol. According to the St. Petersburg Times, a typical 40-million-gallon-a-year ethanol plant uses almost exactly the same amount of water per as an average 18-hole municipal golf course. Why aren’t we seeing any editorials claiming that golf courses are going to drain the aquifers?
Here are a few other bits of trivia regarding “how much water it takes to….”
Process a quarter pound of hamburger - one gallon
Brush your teeth - two gallons
Make one board foot of lumber - 5.4 gallons
Process one can of fruit or vegetables - 9.3 gallons
Make one gallon of paint - 13 gallons
Make one pound of wool or cotton - 101 gallons
Make one barrel of beer - 1500 gallons
Make four new tires - 2,072 gallons
Manufacture one new car, including tires - 39,090 gallons
“This policy has been critical to the growth and economic development of rural America and has added value to our product which for so long has been priced below the cost of production,” Tolman told the subcommittee.
Like Rocky, corn ethanol has always been “a million to one shot” underdog. Like Apollo Creed, the oil industry is cocky and undefeated. The Renewable Fuels Standard is ethanol’s World Heavyweight Championship. The question now is, will Congress stand by the legislation and let ethanol go all 15 rounds, or will it end the match prematurely?
Paul Mulshine starts out saying, “A popular theme of mine is the idea that ethanol is better consumed in beverages than in gas tanks.” 
According to the same trivia facts, it takes 44 gallons of water to refine one gallon of crude oil (actually 1851 gallons to refine one barrel, which is 42 gallons). That could be legitimately compared to the 3-4 gallons of water it takes to process corn into a gallon of ethanol. According to the St. Petersburg Times, a typical 40-million-gallon-a-year ethanol plant uses almost exactly the same amount of water per as an average 18-hole municipal golf course. Why aren’t we seeing any editorials claiming that golf courses are going to drain the aquifers?