Archive for June, 2009

The 2009 BP Stastical Review of World Energy is Out

Wednesday, June 24th, 2009

Around 40 pages of world energy data, and available online at www.bp.com/statistical/review. They have been publishing it for 58 years.

HEK

Admiral James Woolsey on Ethanol from Corn

Thursday, June 11th, 2009

I am running in the red on updating my blog as I grapple with new issues.    Below is a post I started weeks ago, but did not finish.

Last night I had the good fortune to be invited to an event held by the Energy Conversation (http://www.energyconversation.org), featuring Admiral James Woolsey as a speaker.   The title of his speech was:  “Energy in the 21st Century: Can Muir, Patton and Ghandi Agree?”  A rather grandiose title to be sure, but in my opinion, the admiral performed magnificently.   I will discuss his position on producing ethanol from corn, since I do not immediately find it online and it is worthy of discussion.   I am working from notes, not a transcript, and he presented this position in response to a question from the audience.  If anyone interpreted his words differently or has another opinion, my blog is welcome to comments from all but spammers and trolls.

Adm. Woolsey favors the production of corn ethanol, claiming that the major force against it is the grocery manufacturers’ trade association, which wants cheap high fructose corn syrup.  In response to the issue of corn being used primarily as grain for beef production, he points out that cows will still get the spent grain with protein and some unconverted carbohydrates intact, without the sugars in it that are not good for them ( as a onetime expert in microbreweries, I know this to be the case).   So we reduce obesity, reduce the use of antibiotics given to farm animals, and treat cows more humanely, all while producing fuel for our vehicles.  I do not believe he pointed out that Henry Ford’s original plan was to build vehicles that every farmer in our then-rural nation could fuel, but this is true also to the best of my knowledge.

This made me rethink my position.  The reduction in supply of cheap high fructose corn syrup would likely reduce obesity, at least by raising the price and causing producers and final consumers to use less.   I am not an animal husbandry expert, but I have seen feedlots where cows stand shoulder to shoulder in their waste, eating corn.  I have not bought this beef  for years due to both my own health concerns and concerns about how the animals are treated.  His arguments are compelling.

Using corn-based ethanol is not without its costs.  Despite the  current concern about “carbs,” humans have always eaten seed-based diets, and raising the price of corn raises the price of tortillas south of the US border, in areas where obesity is their last concern. The existing products pipeline network cannot move quantities of ethanol over long distances for technical reasons that should be well explained elsewhere.  A few ethanol dedicated pipelines or pipeline segments may move ethanol from the plants to some Midwestern markets, but most transportation must be done by unit train (when available rail lines exist), barges, if the plants are located on major waterways, and then trucked to the tank farms to be blended with gasoline, and then trucked again to the gas stations.  Nobody ever said there was a free lunch.

Much of the Admiral’s reasoning stems from his belief that bad actors control the oil supply, so we should become as energy self-sufficient as possible.  I do not buy into this.  We have enough oil in the Strategic Petroleum Reserve to handle short run disruptions in supply, and no country can stop the flow of oil into the world markets.

I believe a carbon tax, reducing total oil consumption, would work better than lots of  subsidies and programs all over the board to enhance domestic energy alternatives.   I know it is hard to sell taxes to the public and the elected representatives of the taxpayer would rather tell us (and we would rather believe) that there is an easier way out.  Government funding of basic energy research is, in my opinion, still worthwhile, but let them find a way to get the price of new solutions down to competitive levels without a direct subsidy or tax break. This should be easier with a carbon tax that increases price and/or, depending upon the shape of the demand curve, reduces the profitibility of oil producers.

Therefore, while I believe ethanol from corn rightfully belongs the fuel mix, we should not subsidize it by continuing the tax breaks.  Put a tax on all carbon, fund basic energy research with tax dollars, then let markets sort it all out as best they can.

HEK