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Tags: ethanol | fuel

Corn for Ethanol or Food?

By    |   Wednesday, 16 April 2008 04:09 PM EDT

When the final chapter is written on the story of ethanol, conclusions may be far different from the glowing stories that greeted the biofuel alternative energy source at the beginning of the 21st century.

Finally, a true biofuel that could be used in conventional and newly developed hybrid motor vehicles had arrived.

Hidden by the euphoria of this great invention was a genie that would later show the unintended consequences of its introduction into the energy field.

At the present time, the production of biofuels to solve America's critical energy problem involves placing one of the two most sensitive commodities in the economy, food, at the disposal of the other most sensitive commodity, energy. It’s almost cannibalistic.

Both food and energy are so sensitive, due to price volatility, that they were removed from the list of commodities that comprise the Consumer Price Index (CPI) used by the federal government to calculate the rate of inflation in the United States.

The principal one of the two biofuels, at least the most debated at this point, is ethanol.

Ethanol is a product derived from corn.

Ethanol is produced by grinding the corn into a powder, which is then mixed with water and heated. An enzyme is added to produce a solution of sugar. Yeast is then added, creating fermentation in the form of beer, which has about 10 percent alcohol. A distillation process then converts the mixture to pure alcohol. Gas is added to make the pure alcohol unpalatable for human consumption.

This ethanol can be used directly or as an additive to power automobiles.

As usage grew, pressures were put on the corn market and shortly the price of corn rose. Corn began to consume more acreage as more farmers took advantage of the newly created profits. Less acreage for other grains, notably wheat, increased. Hops, a bi-product of barley, increased from $4 to $40 per pound.

Ethanol has destabilized the grain markets. Fields where barley, wheat and oats were previously planted now grow corn.

With the introduction of biodiesel, made from oilseeds such as soybeans, the problem has become more exacerbated.

In the imposed confrontation, energy vs. food, the chances are that energy will prevail. This can be explained, simply, by the fact that the energy side of the equation requires substantial infrastructure. The infrastructure of ethanol production involves billions of dollars.

Investors must be repaid or the entire program of production will fail. Every effort will be undertaken, down to the last ear of corn if necessary, in the case of ethanol, to make certain the investors are repaid.

Therefore, ethanol will be with us for some time, despite the problems that are arising and the questions that must be answered.

One of the most serious of the immediate problems facing domestic production of ethanol is foreign competition.

Brazil is aggressively stepping to the forefront.

Konrad Imielinski (Seeking Alpha) reports: "Rumor has it that Brazil's ethanol producers are getting ready to invade the U.S. market . . ." in spite of the U.S. defensive tariff of 54 cents per gallon. The United States is currently selling ethanol at $2.48 per gallon. Brazil is selling ethanol for $2.18 per gallon.

According to Imielinski, the high corn prices in the United States, at around $6 per bushel, with an expected increase that will make it difficult for U.S. producers to compete. He reports that several U.S. ethanol producers are suspending production and one, Ethanex Energy of Kansas, has filed for bankruptcy.

Further bad news for the international markets for ethanol was the news that both Germany and the U.K. are not pursuing mandatory use of ethanol.

The increasing production of ethanol in the United States and its impact on food and food prices around the world is beginning to build a reaction “against policies in the United States and Europe to promote ethanol and similar fuels, with political leaders from poor countries contending that these fuels are driving up food prices and starving poor people,” so says Tuesday’s April 15 edition of The New York Times.

Overproduction of ethanol is reported to be an added problem.

Among ethanol’s other problems are:

  • Transport is by trucks only — no pipeline or other express delivery system is available.

  • Blending stations for blending the proper amount of ethanol to gasoline are not readily available. The cost of a blending station is about $200,000.

    As ethanol usage increases, its problem of use of food for energy is coming more and more into question.

    As the world population grows by about 75 million per year and the demand increases for more energy, as well as food, will the use of food to create energy remain acceptable?

    That is a question that may well be answered in the streets of the world’s impoverished people.

    All the energy and capital that is being invested by the billions seeking alternative sources of this type will never guarantee energy independence. It may only be a small step forward at an unbelievably high cost.

    The final chapter of ethanol may be that ethanol becomes a victim of itself.

    The biggest problem facing the United States’ energy independence goal is the uncanny ability of the American leadership in both Executive Branch and the Congress to deny the obvious, the drilling of oil wells.

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    When the final chapter is written on the story of ethanol, conclusions may be far different from the glowing stories that greeted the biofuel alternative energy source at the beginning of the 21st century.Finally, a true biofuel that could be used in conventional and newly...
    Wednesday, 16 April 2008 04:09 PM
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