The rise of the United States ethanol industry has had at least one significant impact -- for better or worse, ethanol has tied agriculture prices to the energy market. Now a large increase in speculation for oil leads to increased demand for a relatively cheaper fuel (ethanol), which in turn puts positive pressure on corn prices so as to ensure that enough acres are planted to satiate the demand.
Analysts in both industries will be watching closely Monday as the USDA (United States Department of Agriculture) releases its predictions on summer acreages for corn and soybeans. The estimates are not binding and are based on surveys of farmers, coops, and seed distributors across the country. While many are speculating that USDA estimates will show a decrease in corn acres from the amazing amount of corn planted last year, the futures markets are already making a bold statement. This past week while corn prices dipped to around $4.80 per bushel and allowed ethanol margins to grow slightly, the futures prices for corn climbed to over $5.60 per bushel on the CBOT (Chicago Board of Trade). This indicates that commodity traders are almost positive that the USDA estimates will show a significant decrease in corn production this summer. Even though that will in turn put pressure on ethanol prices to increase, it may not be as bad a thing for corn acres to dip this summer as some might think. Last year saw more than 92.9 million acres of corn planted (which is the most since 1944). Analysts believe that the USDA will predict around 86 or 87 million acres of corn this year -- still a lot but off from last year. This is due to a very strong market for soybeans (nearly $15 per bushel), a need felt among many farmers to practice crop rotation techniques, and a very large increase in fertilizer prices that make growing corn more expensive than soybeans because of their greater need for fertilizer.
My point is that if some of the acres go back into soybeans, it will recharge the land and possibly bring down some of the nitrogen and phosphorous price increases we've seen over the last year. This in turn could allow for a gradual lowing of corn prices to manageable levels while still allowing profit margins to remain constant for farmers. With more and more cellulosic ethanol technology set to come online in the next two years, it would seem prudent to start moving away from a charged up and often speculation-dominated market and prepare for another rearrangement within these markets as ethanol production switches from predominantly corn to a mix of corn and other plant materials.
Saturday, March 29, 2008
Thursday, March 27, 2008
DDGS and E. Coli
With the increasing amount of ethanol being produced, DDGS (dried distillers grains and solubles), seemed to be a great way for the ethanol plant to make a little extra money on the side and for livestock farmers to possibly offset some of the negative pricing pressures that corn-based ethanol places on their input costs. I know of a lot of farmers in this area interested in using DDGS blended into livestock feed as a cheap additive. But a Kansas State University report a few months ago brought up the possibility of a connection between the DDGS and e. coli occurrence in cattle. First of all, if the meat is prepared correctly there is absolutely no connection between possible e. coli abundance and food poisoning. Second, e. coli and other bacteria are commonly found within the animal digestive track and several are necessary for the animal's nutrition.
What's interesting is that no other research team had seen a similar connection between DDGS use and increased e. coli abundance. Today, the exact same group from K-State University announced the completion of a follow-up study which found that there is absolutely no connection between DDGS and e. coli. Don't ask me how someone screwed this one up in the first place but hopefully someone lost their job over it. The fact of the matter is that in this period where there is a highly charged debate over alternative fuels, (and rightly so), the public reaction to these studies can be enormous and the clean-up becomes a daunting task. This is why knee-jerk reactions to these studies are unwise at best. Hopefully this finding will allow farmers who are in a position to purchase DDGS without fear of e. coli proliferation and the pros and cons of ethanol can continue to be vetted correctly in the realm of science.
What's interesting is that no other research team had seen a similar connection between DDGS use and increased e. coli abundance. Today, the exact same group from K-State University announced the completion of a follow-up study which found that there is absolutely no connection between DDGS and e. coli. Don't ask me how someone screwed this one up in the first place but hopefully someone lost their job over it. The fact of the matter is that in this period where there is a highly charged debate over alternative fuels, (and rightly so), the public reaction to these studies can be enormous and the clean-up becomes a daunting task. This is why knee-jerk reactions to these studies are unwise at best. Hopefully this finding will allow farmers who are in a position to purchase DDGS without fear of e. coli proliferation and the pros and cons of ethanol can continue to be vetted correctly in the realm of science.
Tuesday, March 25, 2008
Saving at the Pump
A great report out of Nebraska underscores my point from yesterday's post -- that ethanol is helping control prices at the gas pump. I think it is fantastic to watch the national average gasoline price of regular unleaded climb to $3.26 per gallon in the past week while a quick survey of gas stations here in central Iowa shows a price of around $3.05 per gallon -- a small decrease from last week!
And now, out of Nebraska, the conclusions are clear. With an average savings of 9 cents per gallon using E10 blends of gasoline compared to regular gasoline, the state of Nebraska saves consumers $4 million per month on ethanol! This is calculated by taking the gasoline usage in Nebraska, multiplying into the percentage that using ethanol (77%) and then multiplying that number by the average savings. Amazingly, most gas stations in Iowa offer between 10 to 13 cents per gallon savings on E10 blends and so the savings to the consumer could be even greater than $4 million per month. With E10 blends averaging 10 cents per gallon savings, it should definitely be the fuel of choice, even considering the 2.7% energy density deficit that it carries. All I can say is that although it sucks, filling up on E10 when it is priced at $2.99 sure doesn't feel that bad with other states paying a lot more for their gas.
http://www.mph-online.com/images/mph/208776/5055.jpg
Monday, March 24, 2008
Ethanol May Dampen Gas Prices
The Wall Street Journal is reporting that some energy market analysts predict that ethanol production in the United States could lower gasoline prices during the summer driving season. Analysts from the Credit Suisse have been quoted as saying that the nearly 7 billion gallons per year of ethanol being produced in the United States will serve to lower gasoline prices off of their anticipated record high prices coming this summer. What is interesting is that even though both a downturn in the economy and record high corn prices have cut into ethanol profits and dampened drastic increases in ethanol production, an additional 167,000 barrels of ethanol per day capacity has been added this year. This amount is comparable to a full sized refinery and the lower costs built into ethanol compared to the record high oil prices have begun to put negative pressure on the price of gas. The analysts also predict that with the depressed economy, refiners and blenders who purchase oil will have greater pressure put on them to blend ethanol into more of the gasoline so as to keep prices low enough for consumers to keep buying.
The positive results are already being realized right here in Iowa. Although the survey of the national average of gasoline climbed 7 cents per gallon to $3.22 per gallon, E10 prices here in central Iowa have actually dropped about 10 cents per gallon from a week ago to settle around $2.99. Although I am positive both of these prices will climb as we enter June and July, what's really amazing is the profound affects we are seeing on the price at the pump and on the sometimes stubborn mindset of oil refiners and blenders who are being forced by ethanol to take a second look at what might be best for the consumer. Even though ethanol has a way to go before becoming the ultimate fuel of the future, I for one think ethanol needs to do nothing else to prove itself; given the monumental affects it has already accomplished.
For the Wall Street Article, follow the link below:
http://online.wsj.com/article/SB120631308439758089.html?mod=googlenews_wsj
The positive results are already being realized right here in Iowa. Although the survey of the national average of gasoline climbed 7 cents per gallon to $3.22 per gallon, E10 prices here in central Iowa have actually dropped about 10 cents per gallon from a week ago to settle around $2.99. Although I am positive both of these prices will climb as we enter June and July, what's really amazing is the profound affects we are seeing on the price at the pump and on the sometimes stubborn mindset of oil refiners and blenders who are being forced by ethanol to take a second look at what might be best for the consumer. Even though ethanol has a way to go before becoming the ultimate fuel of the future, I for one think ethanol needs to do nothing else to prove itself; given the monumental affects it has already accomplished.
For the Wall Street Article, follow the link below:
http://online.wsj.com/article/SB120631308439758089.html?mod=googlenews_wsj
Thursday, March 20, 2008
CO/Hydrogen Separation
New research out of the University of Wisconsin (Madison) has shown a significant step forward in fuel cell design. A fuel cell is envisioned to be used in a car either to use stored energy in a hydrogen bond to power a battery to run the car as the hydrogen reacts with oxygen to form water, or a fuel cell can be run on a hydrocarbon such as diesel along to create the hydrogen and power the battery with water and carbon dioxide emitted in that case. What these researchers found was that when hydrocarbons are used, the catalysts used to drive the reaction in the batteries would be "poisoned" because of the carbon monoxide binding to the platinum catalyst. Once these expensive catalysts are poisoned, they no longer efficiently react with hydrogen and oxygen to form water and produce electricity.
In an effort to curb this problem, Bryan Eichhorn and Manos Mavrikakis designed a special nanoparticle that wants to oxidize CO to CO2 in the presence of hydrogen. First of all, a nanoparticle is simply a small molecule or compound that is very small -- nanometers in length. And the term oxidize refers to the addition of an oxygen atom to the molecule or the removal of a hydrogen atom from a molecule. In this case, the nanoparticle catalyst wants to add an oxygen atom to CO to produce CO2. The researchers did this by using a particle of ruthenium surrounded by one or two layers of platinum. The researchers discovered the nanoparticle uses a novel chemical reaction mechanism that actually makes hydrogen react with oxygen at the start of the reaction. This intermediate then more easily adds an oxygen atom to CO and leaves the hydrogen unreacted to be used in the fuel cell reactions. Also, the addition of the ruthenium particle necessitates reaction temperatures only as high as 30C, which is much less than the 85C that past catalysts have required in order to oxidize CO in the presence of hydrogen.
Although this process is very interesting for fuel cell design, I think the study is a much more important showcase for biochemical ingenuity. By uncovering this new reaction mechanism, new enzymes/nanoparticle catalysts could be developed to further this process. Also, many lab and companies deal with gas stream separation on a daily basis; having the right kinds of tools to deal with the problem is essential and could allow for much more efficient reactions to take place.
For original paper, follow this link:
http://www.nature.com/nmat/journal/v7/n4/abs/nmat2156.html;jsessionid=3FF0F02A8B76048826E3326602E98BCD
In an effort to curb this problem, Bryan Eichhorn and Manos Mavrikakis designed a special nanoparticle that wants to oxidize CO to CO2 in the presence of hydrogen. First of all, a nanoparticle is simply a small molecule or compound that is very small -- nanometers in length. And the term oxidize refers to the addition of an oxygen atom to the molecule or the removal of a hydrogen atom from a molecule. In this case, the nanoparticle catalyst wants to add an oxygen atom to CO to produce CO2. The researchers did this by using a particle of ruthenium surrounded by one or two layers of platinum. The researchers discovered the nanoparticle uses a novel chemical reaction mechanism that actually makes hydrogen react with oxygen at the start of the reaction. This intermediate then more easily adds an oxygen atom to CO and leaves the hydrogen unreacted to be used in the fuel cell reactions. Also, the addition of the ruthenium particle necessitates reaction temperatures only as high as 30C, which is much less than the 85C that past catalysts have required in order to oxidize CO in the presence of hydrogen.
Although this process is very interesting for fuel cell design, I think the study is a much more important showcase for biochemical ingenuity. By uncovering this new reaction mechanism, new enzymes/nanoparticle catalysts could be developed to further this process. Also, many lab and companies deal with gas stream separation on a daily basis; having the right kinds of tools to deal with the problem is essential and could allow for much more efficient reactions to take place.
For original paper, follow this link:
http://www.nature.com/nmat/journal/v7/n4/abs/nmat2156.html;jsessionid=3FF0F02A8B76048826E3326602E98BCD
Friday, March 14, 2008
Dallas Texas Ethanol Terminal
Within the debate over the pros and cons of ethanol, a lot of thought has to go into its transportation. Because of the phase separation that occurs with ethanol in gasoline, the possibility occurs for it to mix with small amounts of water in a gasoline pipeline and carry particulate matter. This is undesired and has eliminated the possibility of transporting ethanol through conventional gasoline pipelines. On the plus side, this has led to a railroad renaissance and produced talk of expanding rail capacity or upgrading existing lines to meet the need for transport. May 28th will see a huge step in upgrading the nation's rail systems due to ethanol's effect. Texas, and particularly the Dallas-Fort Worth area, is a huge potential market for ethanol. Providing cheap and efficient transport into that area would be a huge benefit to Midwest ethanol plants and a good way to jump-start ethanol usage in the South while cellulosic technologies come online in the area. US Development Group, in alliance with Union Pacific, has built a state of the art ethanol terminal in the Dallas area, set to open May 28th, which will be a major jumping off point for ethanol to end up in that city or to be trucked to other major areas in the state.
The company indicates that this state-of-the-art terminal was built specifically so that ethanol trains would not add any congestion to existing rail lines. Also, the terminal is capable of quickly offloading an 84-car unit train of ethanol with dedicated pipelines to truck terminals that will allow for quick and easy distribution of the fuel to gas stations. In recent weeks with the astronomical rise of first crude oil and now gasoline, and the relatively flat price increases in ethanol, blending 10% ethanol into gasoline will not only be a huge windfall for gasoline blenders but hopefully also for consumers. This is because since so much ethanol currently exists, the price per gallon is nearly a dollar cheaper than gasoline. Once blending occurs, retailers should offer at least 10 to 15 cents per gallon off of a gallon of E10 gasoline to offset the energy density decrease in ethanol and because their fuel is at least that much cheaper to produce.
With this efficient connection to the South the United States will see a much more widespread use of ethanol. With it will come more people enjoying the fuel but also a renewed need to work quickly to solve some of the problems that exist in the ethanol process before the fuel becomes more widespread and produced in higher quantities.
The company indicates that this state-of-the-art terminal was built specifically so that ethanol trains would not add any congestion to existing rail lines. Also, the terminal is capable of quickly offloading an 84-car unit train of ethanol with dedicated pipelines to truck terminals that will allow for quick and easy distribution of the fuel to gas stations. In recent weeks with the astronomical rise of first crude oil and now gasoline, and the relatively flat price increases in ethanol, blending 10% ethanol into gasoline will not only be a huge windfall for gasoline blenders but hopefully also for consumers. This is because since so much ethanol currently exists, the price per gallon is nearly a dollar cheaper than gasoline. Once blending occurs, retailers should offer at least 10 to 15 cents per gallon off of a gallon of E10 gasoline to offset the energy density decrease in ethanol and because their fuel is at least that much cheaper to produce.
With this efficient connection to the South the United States will see a much more widespread use of ethanol. With it will come more people enjoying the fuel but also a renewed need to work quickly to solve some of the problems that exist in the ethanol process before the fuel becomes more widespread and produced in higher quantities.
Wednesday, March 12, 2008
Ethanol Facts
Instead of a news article, I thought I'd educate a little bit on some of the facts of ethanol in the United States as it currently stands for corn-based ethanol:
1) One bushel of corn produces 2.8 gallons of ethanol and 17-18 pounds of DDGS (dried distillers grains).
2) One acre of corn produces approx. 500 gallons of ethanol -- enough to fuel six cars for a year on E10.
3) As of 2006, approximately 30% of all motor fuels in the US had some ethanol blended into it.
4) Argonne National Laboratory concluded a study last year that found ethanol reduces greenhouse gases 35% - 46% over gasoline derived fuels.
5) Every 100 BTUs (British Thermal Units) of energy used to produce ethanol becomes 167 BTUs of energy in the form of ethanol.
(The reason this can occur is that the light energy gained from the sun during the growth of the plant is not included in the calculation -- an ethanol plant is approximately 38% efficient in recovering chemical energy).
6) Although an ethanol plant may be 38% efficient, our power plants generate electricity at an amazing 30% efficiency.
7) The United States is composed of 1.9 billion acres of land; 450 million is categorized as crop land and 580 million acres is pasture.
8) Hardware needed to make a vehicle into a flex-fuel capable car is $100-$200.
9) As of 2006 there were 4-5 million E85 capable cars in the United States (which is 2-3% of US car fleet).
10) An E85 blend of gasoline will decrease VOCs (volatile organic compounds) by 15%, carbon monoxide by 40%, nitrous oxide by 10%, and sulfate emissions by 80%. All of these compounds are greenhouse gases or smog related compounds. (This information from the Oklahoma Department of Environmental Quality).
Sources:
http://www.iowacorn.org/ethanol/ethanol_3a.html
http://www.energycommission.org/files/finalReport/IV.4.c%20-%20Cellulosic%20Ethanol%20Fact%20Sheet.pdf
http://www.deq.state.ok.us/factsheets/air/ethanolfs.pdf
1) One bushel of corn produces 2.8 gallons of ethanol and 17-18 pounds of DDGS (dried distillers grains).
2) One acre of corn produces approx. 500 gallons of ethanol -- enough to fuel six cars for a year on E10.
3) As of 2006, approximately 30% of all motor fuels in the US had some ethanol blended into it.
4) Argonne National Laboratory concluded a study last year that found ethanol reduces greenhouse gases 35% - 46% over gasoline derived fuels.
5) Every 100 BTUs (British Thermal Units) of energy used to produce ethanol becomes 167 BTUs of energy in the form of ethanol.
(The reason this can occur is that the light energy gained from the sun during the growth of the plant is not included in the calculation -- an ethanol plant is approximately 38% efficient in recovering chemical energy).
6) Although an ethanol plant may be 38% efficient, our power plants generate electricity at an amazing 30% efficiency.
7) The United States is composed of 1.9 billion acres of land; 450 million is categorized as crop land and 580 million acres is pasture.
8) Hardware needed to make a vehicle into a flex-fuel capable car is $100-$200.
9) As of 2006 there were 4-5 million E85 capable cars in the United States (which is 2-3% of US car fleet).
10) An E85 blend of gasoline will decrease VOCs (volatile organic compounds) by 15%, carbon monoxide by 40%, nitrous oxide by 10%, and sulfate emissions by 80%. All of these compounds are greenhouse gases or smog related compounds. (This information from the Oklahoma Department of Environmental Quality).
Sources:
http://www.iowacorn.org/ethanol/ethanol_3a.html
http://www.energycommission.org/files/finalReport/IV.4.c%20-%20Cellulosic%20Ethanol%20Fact%20Sheet.pdf
http://www.deq.state.ok.us/factsheets/air/ethanolfs.pdf
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