4 replies to this topic

[Doug]

The ethanol story or "deathanol" as it is currently being called in many circles will be the topic of discussion when Archer Daniels (ADM) reports on Monday and Pacific Ethanol (PEIX) reports on Friday. For all practical purposes corn ethanol as a growth sector has died. The number of plants coming online has far exceeded the demand for the fuel and the costs currently outweigh the selling price. As the tax credits come to an end so will the viability of corn-based ethanol. The cost in energy to produce it was never conducive to extensive long-term use. According to generally accepted costs after a couple years of process refinement it takes about one gallon of fuel to produce 1.2 gallons of ethanol. Since ethanol has about 20% less power than gasoline and E85 cars get about 20% less gas mileage per gallon the future is grim for corn-based ethanol. The only way it will ever work is when peak oil is finally apparent and crude rises to $150 a barrel or more and becomes scarce. The target for permanent scarcity to begin is 2009-2011.

The ethanol story will improve when cellulosic ethanol becomes a reality. Cellulosic ethanol is made from waste products like corn stalks, switch grass, woodchips and similar waste. There are several pilot plants running around the globe but nobody has yet been able to perfect the process to make it in commercial quantities. It is a slow process and input intensive. Until cellulosic becomes a reality most analysts expect significant consolidation in the sector with many ethanol startups going out of business. Archer Daniels stands to gain from this consolidation since ethanol is only a fraction of its business and they have a strong balance sheet that would allow them to be the acquirer at the top of the consolidation food chain. IPOs for ethanol companies are being pulled on almost a weekly basis as the price of ethanol continues to decline. Agassiz Energy delayed (translation = cancelled) its $58 million IPO and plans to build a Minnesota plant due to the drop in ethanol prices to $1.50 over the summer. ASAlliance Biofuels formerly pulled its $300 million IPO last week and was sold to VeraSun Energy (VSE) instead. Other listed companies AVR, USBE and PEIX are all trading at or near 52-week lows. Another problem for ethanol use is the lack of pipelines. Since ethanol contains some water the pipeline companies won't allow it in their pipelines. Petroleum products expel water and prevent pipelines from rusting. Ethanol is highly corrosive and the water promotes rust. The cost to construct an ethanol pipeline is about $2 million a mile. Pipeline companies are refusing to put out that kind of money until the production and use of E85 ethanol becomes more prevalent.

Regards,

[Douglas]

Corn squeezin' moonshine ethanol never made sense, but sugar cane white lightning does as Brazil has demonstrated. When the morons in Washington drop the import tarrifs on imported ethanol and drop the subsidies for the corn crop, the tide will turn.

[Trend-Shifter]

What many people don't realize is that the subsides go to "big oil" just to mix the ethanol with gasoline. No subsides go to the upstream production or downstream distribution. Corn can be transported and processed close to the point of sale. So you do not need a pipeline system. The big oil lobby is fighting ethonol hard because the subsides will end and ethanol production can increase the supply side of the equation. So what that says is that ethanol production costs are a viable option to gasoline if we could get "big oil" out of the refinery portion of the equation. GM desires a lot of credit to develop the necessary automotive technologies so a vehicle has both options.

[weee3]

There's a company in Japan claiming to be the first to begin commercial scale production of cellulosic ethanol.

http://www.treehugge...ulosic_etha.php

The article at the company web site:
http://www.bio-ethan...s.php?eid=00029

Cut-n-paste the above company link and paste it into Google Translation web page below to see it in English.
http://www.google.co...age_tools?hl=en

[Sentient Being]

The UN just came out opposing turning food to fuel. They have been unable to meet their global food commitments as food prices have been rising, partially as a result of turning corn to ethanol. Not to mention the fact that a group of scientists came out and discovered that corn adds a greenhouse gas ingredient that other studies didn't look it. It makes Ethanol Gas WORSE for greenhouse gas problem than just regular gas. I think Corn to Ethanol is about to die while even as the Senate just recently passed a bill to expand it. junk science legislated.