Producing Ethanol

It can be interesting how, once information makes its way onto the internet, it can be perpetuated long after new information contradicts it.  I recently read how forty percent of the corn crop grown in the U.S. is being used in the production of ethanol (google: "40 percent of corn used in ethanol").  As a result, there is concern about corn prices, and even wheat prices being forced higher.

When I researched further, I found it interesting to find how little of what I had been led to believe in the past was true.

Myth Number 1:  The use of corn to make ethanol is driving up the price of grains.
Prices may be up, but it isn't necessarily because corn is being used to make ethanol instead of being used as feed.  Corn is mostly used as animal feed, and the corn that is used to make ethanol can still be added to feed.

Myth Number 2:  It takes more energy to make ethanol than ethanol produces.
According to calculations using modern farming procedures and modern production techniques, it is currently estimated that ethanol contains at least 30 percent more energy than it takes to make it.

Myth Number 3:  Using all of the farmland in the U.S. to produce corn for ethanol would only meet 4 percent of the energy needs of that country.
Ethanol burns cleaner and is therefore better for the environment.  The carbon dioxide that is given off in the fermentation process can be captured and used, or stored instead of being released into the atmosphere as when burning hydrocarbons.  Any reduction in green house gases should be seen as good.  We spend money on wind and solar.  They will never meet the total energy needs of the U.S..  Does that mean we shouldn't bother?

Myth Number 4:  Corn grown to produce ethanol is ruining the farm land and wasting water.
That is like blaming nuclear power plants for nuclear bombs.  The real problem lies in proper farming practices, not in the type of crop being grown.  It is okay to grow corn for feed, but it is not okay to grow corn to produce ethanol and then use the corn for feed.  Why?

Myth Number 5:  The high price of corn (because of ethanol) is driving up the price of meat.
As stated before, the more corn that is grown for ethanol production, the more of it is available for feed.  How does that increase food costs?

Myth Number 6:  Ethanol production is only viable because it is subsidised.
With corn at $3.00 a bushel, it is believed to be competitive when oil is at $70.00, or more, a barrel.  The price of corn has risen to twice that recently.  How much should we expect to pay for a barrel of oil in another year?  Two years?

All in all, I am sure the production of ethanol is having some affect on corn prices, but to say the current price of food is because of ethanol is, in my opinion, irresponsible.  Then there is the question of whether it is a good idea to subsidise the production of crops for energy.  We subsidise other forms of alternative energy, why is this example such a particularly bad one?  If we really want to be efficient in our land use, we should stop growing corn for feed, eat less meat, and grow more human food.  Why don't we do that?

Rather than debate the real facts, we end up with a whole lot of misinformation for, and against.  This is exactly what I warn against when trying to decide where to put your money in the stock market.  Identify the relevant data, verify it, check for hidden agendas, and don't listen to all of the unsubstantiated double talk.  By knowing what to look for we can avoid a huge amount of irrelevant, and misleading "noise" and focus, instead, on the important facts that can give us a real return on our money.

Was it only me?  Had you heard of any of these myths about ethanol?

The Price Of Gas

In the coming episode of, "Nobody could see it coming", we'll get to debate why we are spending billions of dollars on bailouts, stimulus, and infrastructure, without ever giving real consideration to any planned conversion to natural gas.  Sure, Boone Pickens has been making noises in the U.S., but up to this point, little has changed.  The price of natural gas has long been below the level where it would save companies money to switch from oil to gas.  As I was driving to Toronto on Wednesday, there were points in time where, of the three lanes of traffic, two were almost solid with trucks, one after another, after another, for as far as I could see.  I don't remember seeing any which were fuelled by natural gas.

Why is it my hydro bill is going to double, at least, in the next couple of years because we want to pay hefty subsidies to the marginal providers of electricity generated by solar panels, and wind turbines, while we continue to ignore the fuel of which we probably have over a hundred years of supply?  Why is it we can afford to build the infrastructure for alternative energy sources, but not for larger, cheaper, energy sources?  Do politicians really think we are going to switch to electric trucks, any time soon?

In the mean time, the current economic recovery, if it can be called that, could be in serious jeopardy.  While it may have been difficult to foresee the magnitude of the Muslim revolution throughout many of the oil producing nations, it isn't too hard to do the math when it comes to figuring out who is most in need of most of their oil.  Did not anybody stop to consider that most of the oil revenues were going into the pockets of a small number of, mostly corrupt, individuals.  Was there no thought given to what would happen when the have-not's could no longer feed their own?  Is it not ironic that despite their denials, this whole situation likely has been made much worse by the monetary policies of those who are most dependent on foreign oil?  At this point, should we even be surprised?

I have said it before, and I'm saying it again - if people can't be that stupid, then they must be getting some form of compensation for doing what it is they are doing.  Think about it.  Using natural gas to, at least, power our transportation industries, would save money, be better for the environment, and create jobs.  These jobs would be needed to produce the natural gas, and to build out the required infrastructure while reducing dependence on foreign oil.  So why not?  The only conclusion one can come to is the politicians are serving the oil industry.  Why else would a country like Canada not want to replace oil with natural gas?  Why else would we not have better environmental standards?  It isn't like we don't know the issues regarding finding, drilling for, pumping, refining, and burning the stuff!

I feel like I am watching a bad episode of Laurel and Hardy - "Here's another nice mess you've gotten me into!"  Every time I go to the gas pump, now, I think about how it costs me a larger and larger portion of my income when fueling my car.  Every time I open my utilities bill, I am reminded of how much more government is costing me.  We scrapped the original electric cars so that we could bail out the auto industry for making obsolete products.  Now we could force the economy into recession, again, rather than clean up our act by doing the logical, more environmentally friendly, and cost-effective thing by reducing oil consumption and making natural gas the better alternative.

Let's just say I'm not about to run out to buy shares in any natural gas companies for awhile.  As for the arrogant politicians, despite even further costs, I can hardly wait for the next elections.

How high do you think the price of oil/gasoline can go?