What About Ethanol?

[Steve Pierce]

Figured Marty would like this from AVweb today.



The high price of avgas has a Brazilian plane-maker turning to alcohol. Neiva, a subsidiary of Embraer, delivered the world's first production model ethanol-powered crop duster in March and has plans to build 70 more this year. For 30 years, Brazil has been developing ethanol-fueled vehicles to reduce dependence on oil imports and at least a third of all cars produced there can run on alcohol. There are about 400 aircraft adapted to run on ethanol but the EMB 202 Ipanema is the first certified production aircraft. It's powered by a Lycoming IO-540. While Brazil lacks oil resources, it does have the ability to grow huge amounts of sugar cane, from which the ethanol is produced at about a quarter the cost of gasoline, which now runs at about $7 a gallon in Brazil. The ethanol-powered Ipanema costs about $14,000 more than the avgas version but the fuel savings, plus the greater durability and what the company claims is a 7-percent increase in power output from the modified engine, makes up for the higher initial cost. Neiva director Acir Padiha also noted that ethanol pollutes less and is a renewable resource, assuming you have the land and climate to grow millions of acres of sugar cane. The company is now planning to convert six-passenger Sertanejo and Minuano aircraft to ethanol.

[180Marty]

Thanks Steve, I probably would have missed that one. Hope Lycon and others check it out---I guess Texas Skyways already has. Maybe one of these days I can try it out also. If you see more info like that please post it.
Thanks again, Marty

[Steve Pierce]

Saw on CBS News Sunday Morning they had a piece on Carl's Truck stop south of Dallas. Seems Carl and Willie Nelson are planning on building a biodiesel refinery there.

[FiftyNineSC]

Thanks Steve, I probably would have missed that one. Hope Lycon and others check it out---I guess Texas Skyways already has. Maybe one of these days I can try it out also. If you see more info like that please post it.
Thanks again, Marty

Marty, I just spent the day with Jack at Texas Skyways. Got to fly thier Ethanol powered, O-520 180. They do have an STC for it. I found that the airplane operated just fine and made plenty of power. The only thing that i did notice was the fumes. Seemed a little overpowering in the cockpit. Don't know if that's just the way its going to have to be or if any ehaust mods can be done to lessen the effect.

[sekps]

How about this?

http://www.age85.org/

/Mattias

[180Marty]

Just got home from Minneapolis doing a BFR with Brian at Adventure Seaplanes. Flew his PA 12 on floats---what a blast.Thanks for the info Steve and 4653B. Stopped at the biodiesel plant on the way up----they're installing a pump so you can drive in and fuel up for $2.10 a gallon. One of the guy's at Surfside might be interested in my O-470K so am going to see what it takes to get an ethanol burner installed on my "54" 180. Was it raw fuel you were smelling or exhaust? Would think whatever the problem, 100LL would have also. I kinda like 100LL smell and also like ethanol(smells like beer). Hi sekps, Just read that in Sweden they're installing "blender pumps" where you can choose 20,25, and 85% ethanol for your car. Have you seen any yet?
Marty

[FiftyNineSC]

Marty,

the fumes I smelled were more of the exhaust variety. Kind of similar to being at drag race when an Alcohol race car goes by. I don't know if it's the density of the exhaust or what but it sure seems to make it up into the cabin. Could have been the way the airplane was coweled up though...They've got an experimental faring on the lower end.

Bill

[sekps]

Hi sekps, Just read that in Sweden they're installing "blender pumps" where you can choose 20,25, and 85% ethanol for your car. Have you seen any yet?
Marty

No, that's new to me. We have the pumps where you can choose 95 or 98 unleaded (5% ethanol) or E85. E85 is taking off right now so I think a blender pump like the one you mention is still just an idea.

I used to work as a component engineer for gas pumps (Wayne Dresser) and some of my old colleagues are still there. I think I'll have to check with them...

/Mattias

[180Marty]

Mattias, Interesting you mentioned Wayne Dresser. Clean Fueling Technologies in Georgetown Tx is just about to get UL approval for a WD blender pump that can dispense straight unleaded, 10% ethanol, and E-85 from 2 tanks of fuel---- one straight unleaded and one with straight denatured ethanol. What I read about Sweden was you could dispense any % from 5 - 25% ethanol for regular cars and E-85 for flex fuel vehicles from a tank of 95 Octane and a tank of ethanol. Maybe that is wrong.
Thanks for the reply,
Marty

[jnorris]

Hope Lycon and others check it out---I guess Texas Skyways already has.

Before going too far down the rosy ethanol path, you might want to ask the folks at Texas Skyways some pointed questions about their E-85 STC. It's my understanding that the "E-85" that they use in the aircraft is a totally different product that the "E-85" that you typically find at the corner gas station. I also understand that there could be some materials compatibility issues with the airframe/fuel system if this fuel were used without modifications to the system in the airframe. Further, it's my understanding that, since there is no ASTM specification for the particular fuel that they used in developing the STC, that the STC would be virtually useless until such specification were developed (which I believe is in process at this time).

I'm not saying that this is a bad idea. I'm just saying that it doesn't sound like the E-85 aviation fuel is ready for prime time yet, and that anyone who's considering going this route ought to make darned sure that they know the answers to ALL the questions before they get too far down the road.

Food for thought!

Joe

[180Marty]

Joe, I know that E-85 and AGE-85 are different. AGE-85 is 88% ethanol, 11% pentane(one of the more volatile components of gasoline) and 1% biodiesel to protect against corrosion. I haven't actually tested AGE-85 yet but have E-85 in unmodified vehicles and a jar test for 14 months now with some 180 seals and aluminum. No deterioration yet. Did you talk to Jim Behnken at Oshkosh--- he had the Ag Cat, Mooney there 2 years ago? Also the Van Guard team has had their RV 3's there a bunch. I watched all of them being fueled with AGE-85. Go down to Utica Energy just southwest of the airport and get some ethanol and do your own test and see what happens. I'm pretty sure nothing bad.
Marty

[180Marty]

http://www.ethanol.org/PressRelease10.27.05.htm

You might find this interesting.
Marty

[Hyrdflyr]

What kind of fuel burn are they getting compared to 100ll for the same application?

I used to run methanol in some race bikes and the first thing we had to do was drill out the jets to 100 % oversize. We were able to bump the power slightly but at the expense of a lot less laps per gallon.

Buying a fuel at 2/3d s the price of 100 LL and then using twice as much might not be much of a deal unless you just couldn't get any avgas at all.

Me; I'm thinking about how to strap an LPG tank under each wing and run that way. I ran a 72 Ford pickup a hundred thousand miles on propane and it got tuned up once in that time when the plug electrodes finally dissappeared. The oil was clean all the time, with no regard to time in servie and the carb converter worked flawlessly. The only advantage the truck engine had was the ability to use the engine coolant for a medium to warm the propane as it fed to the converter in the winter, but that could be resolved easily, I believe with a fuel radiator like used in race cars, only fed with a carb heat type of source.

This country has all the natural gas we could use in the next century, and I think we're idiots not to be using it more now. I know the gas company here in Anchorage has a large portion of their fleet using Natural gas and have for years with no attempt by anyone else to utilize it that I have heard of.

[180Marty]

According to South Dakota Univ. testing AGE-85 in the 180 Cessna with good leaning, about 10% more fuel flow at economy cruise settings. I figure about 16% reduction in mileage with my Ford Taurus when using E-85. Ethanol will keep the engine as clean as that propane setup. Propane has 91000 btu's per gallon and ethanol 76000 btu's, both like high compression ratios. If there is so much natural gas in this country, why is the bill that came today $12 per million btu's?
Marty

[Hyrdflyr]

I have been told that: because some marketing genius years ago saw this day coming and lobbied the government to set the tarrif rates to an index of the cost of other fuels. Coal has the same deal in some instances.

I never figured out why natural gas here in Alaska is SUPPOSEDLY worth more now, and we're charged more, EVEN THOUGH THERE IS NO WAY TO MARKET IT ELSEWHERE!!

all government approved of course....

Like everywhere else,we have the same bollicked up mess here in Alaska with tarriff rates on barge, trains and other types of regulated stuff. I once went to a utility meeting and pointed out to all the executives and managers that claimed their hands were tied and they couldn't do anything about the rates because of the tarriff, that the tarrif plainly stated that it was a maximum and nobody was forcing them to raise the rates governmentally. I was declared out of order and rather rudely dismissed from the hearing.

We're just screwed, that's all


For many years, propane was one third to one half the cost of car gas. that's why I ran it in my truck in the 70s. Now it and diesel is more than the cost of car gas. Go figure. All those walmart barbecues drying up the supply?

Can't stop now. Exxon just declared a 9.9 BILLION Dollar profit this last quarter. How much do you supposed they will pay in taxes? Probably not much more than I do. Bush saw to that when he rescinded the alternative minimum corporate tax that Reagan enacted as a matter of fairness. Oh hell, here comes Christina...

And they still never paid the Exon Valdez oil spill settlement bill which I think is down to about 1.75 billion or so, down from 3 or 4 in the original judgement. they're just waiting for all the original claimants to die and then they will settle for 10 cents on the dollar.

[Christina Young]

All corporate taxes should be repealed anyway, they are just passed along to the consumer. I would think those on the left would be most against these kind of "regressive" taxes.

[180Marty]

Hyrdflyr, I admire you for going to that meeting to express your ideas. My idea is if you don't use the products that those people that threw you out of the meeting sell then you are not empowering them further. I like using fuel that I can make or am a part of.
Marty

[FiftyNineSC]

Exxon just declared a 9.9 BILLION Dollar profit this last quarter. How much do you supposed they will pay in taxes? Probably not much more than I do. .

Directly from the public info report: Exxon Mobil Corp.

First Quarter ( In millions of dollars)

2005, 2004 Respectively
Income taxes; $ 5,043M, $ 3,522M
Excise taxes; $ 7,238M , $ 6,416M
All other taxes and duties; $ 10,944M, $ 10,853M
Total $ 23,225M , $ 20,791M

Effective income tax rate 41.3 % , 41.8 %

I don't know if I understand all the economics, In fact I'm sure I don't, but 23.225 Billion dollars in taxes every three months sounds like a lot. Regardless, saying that big oil or corporations in general are not paying any more taxes than "I do" is not factual.

[Gunny]

And then the shareholders (you and I) will pay tax at their individual rates (15% to 33%) on the dividends paid after Exxon - Mobil has already paid the 41% on the income. The word thieves springs to mind.....

[Hyrdflyr]

It would be interesting to see what Exxon grossed for those periods. If they manage corectly, an oil company has an ability to off set taxes, unlike any other business I know except possibly race horses, ( yes I've owned a couple- great tax breaks- not a good way to reliably make a living)

As explained to me....They can depreciate oil that is in reserves and IS INCREASING IN VALUE and use it to off-set income. Additionally, if managed for the benefit of the stockholders (which most are NOT- witness Microsoft) the payment of dividends etc puts them in a breakeven mode in which they do not pay income taxes as a general rule IF they manage for the benefit of their shareholders ( quaint notion) and have sufficient reserves as an offset. Exxon, for one, has cut back on development and exploration for the last few years and may be in a position where they are, in fact, paying income taxes, but porportionate to gross income, its still not much considering that AFTER taxes, they made9.9 Billion. Any body got an idea what they grossed worldwide?

Just a side note of interest. I found an industry who actually puts their profits in the hands of the stockholders. Think Tankers. One company I have stock in is paying a 20% dividend this year, and because they pass on their profits to their investors, they don't pay income taxes, and Yes, Christina, that's how it should work. Most companies pay squat for dividends and pay their upper level management far in excess of their true worth in way too many cases, witness Tyco etc.

[Christina Young]

I agree, Gunny. You are taxed multiple times on the same revenue stream that is yours - this is theft in my book too.

I'm tired of hearing about the "obscene" oil company profits. They are due to a combination of 3 things: LIFO accounting, the recent Greenspan devaluation of the dollar, and the supply crunch caused by Katrina and Rita. If the oil industry used FIFO accounting, they wouldn't be booking the large profits and there would be no calls for "price gouging investigations". These extra profits are largely an accounting fiction.

The oil industry isn't exempt from the laws of economics, and it is one of the most competitive industries there is.

[Steve Pierce]

I'm pretty ignorant when it comes to this stuff, but it appears to me that if they were truly hurting from the hurricanes their profits would be down. If my hanger got hit and I couldn't fix airplanes my profit would be down.

[180Marty]

The ethanol plant I'm an investor in is set up as an LLLP. For the fiscal year ended last month I recieved a little more than 40% return on my money which I have to pay taxes on. Cheap corn made it work pretty well. Anyone on this site could be a member as you don't have to deliver corn.
Marty

[jnorris]

Marty,

Sorry to take so long to respond on this one. I'll get caught up someday!!

Let me start out by saying that I'm not necessarily opposed to the use of ethanol, IF it's done by choice, and forearmed with the appropriate knowledge of the pros and cons. What I AM against is being forced to use ethanol if I personally choose not to, as is happening more and more around the country as ethanol is mandated by government.

Another thing I try to guard against is broad brush statements, either pro or con, which leads me to....

I haven't actually tested AGE-85 yet but have E-85 in unmodified vehicles and a jar test for 14 months now with some 180 seals and aluminum. No deterioration yet.

The problem is, you just can't be sure. While the use of ethanol in an existing, unmodified aircraft fuel system may work ok, there is no guarantee. I've seen more than enough instances where ethanol caused swelling of hoses and other problems with soft products in the system that you cannot just pour it in an airplane and not have to worry. Certainly an aircraft can be made to run on ethanol-based fuels, but it just doesn't happen automatically. There is a potential for problems, and you can't accurately predict which aircraft will have problems and which won't. Many people try to discount this potential, and that's what I disagree with. Unless you test every soft component in that individual aircraft, you can't be sure there won't be problems.

Go down to Utica Energy just southwest of the airport and get some ethanol and do your own test and see what happens. I'm pretty sure nothing bad.

I don't go near Utica Energy any more than I have to. The place stinks like a still (which it is) and makes my eyes burn!! As for doing my own testing, see my comments above. I can test all day long, but that doesn't guarantee that the components that are actually installed in my airplane won't have an adverse reaction. I don't want to take the chance. Your mileage may vary!

Joe

[Christina Young]

I'm pretty ignorant when it comes to this stuff, but it appears to me that if they were truly hurting from the hurricanes their profits would be down. If my hanger got hit and I couldn't fix airplanes my profit would be down.

Steve, let me use an example to explain. Unfortunately there is a lot of misinformation out there by the know-nothings in the media (and financial & economic principles aren't really taught in our school system), and a lot of people don't understand what is going on.

When you have a company that buys or produces and then sells a product, you need to have inventory. There are three basic ways to do your inventory accounting. One is actual item basis. This works if all your items are a little different, or you can easily identify which item is which. The other two methods are FIFO -- First In, First Out, and LIFO -- Last In, First Out. The oil industry uses the latter.

Suppose you've got BigOil, Inc. They produce and sell crude oil. That's all they do, to keep this example simple. So in the first year of operation, BigOil produces 100,000 gallons of oil at a cost of $1.00 per gallon. It then sells 75,000 gallons throughout the year for $1.25. At the end of the first year, it has 25,000 gallons left in inventory, and it's made a profit of $18,750 ($0.25 on each of the 75,000 gallons it sold).

Let's say that Greenspan then goes from a "strong dollar" monetary policy to a "weak dollar" policy..... flooding the market with too many dollars, thus devaluing the currency and causing inflation. What cost $1.00 to produce last year now costs $1.50 - and it's all been due to inflation, a 50% devaluation. I know it hasn't happened this fast (has really happened over the span of a few years), but let's do it just for the sake of illustration.

During year two, it produces 200,000 gallons at $1.50 per gallon, and sells 140,000 for $2.00 per gallon. So at the end of the year, in its oil tanks, it has 85,000 gallons of oil in its tanks. It started the year with 25,000 (carried on the books at $1 / gal cost), and added 60,000 (because it produced 200,000 and sold 140,000).

What was the profit in year 2? Well, it depends on which gallons you assume BigOil sold. It sold 140,000 gallons. But since all the gallons were mixed, we don't know if it sold 140,000 of the gallons it bought in year 2, or if sold the last 25,000 gallons that were around at the year 1, plus 115,000 gallons that it bought in year 2. Since you can't possibly know exactly which gallons were sold, accountants let you assume. You can assume that the first gallon in was the first gallon sold, or you can assume that the last gallon in was the first gallon sold. If the company uses FIFO, then its profits in year 2 would be:

25,000 x ($2 - $1) + 115,000 x ($2 - $1.50) = $82,500.

But if the company uses LIFO, then the profits would be: 140,000 x ($2 - $1.50) = $70,000.

So the reported profits -- and thus paid taxes -- are higher under FIFO than under LIFO in an "ordinary" scenario. But there's no physical difference at the company under each scenario. In both cases, the company has the same amount of oil in its tanks, and its cash flow is the same. The only difference is how much to pay in taxes. So companies report lower taxes, and also lower profits, at least on paper.

So, in any event, things go on with BigOil. Every year, it keeps producing oil, and selling it, and since it's getting bigger, it keeps a bigger inventory on hand. But then Katrina comes, wipes out some serious production capacity, and oil really spikes. So BigOil starts dipping into reserve inventory. But as it does, it is selling "cheaper" oil - produced with stronger, pre-inflation dollars. In the example above, in the third year, if the company depleted its entire inventory, it would be selling some of the oil it bought for $1.00 (25,000 gallons worth) and the 40,000 gallons it bought for $1.50. Go enough years, and the company is going to have some "old" oil on its balance sheet that it technically produced very cheaply in dollar terms.

Unfortunately, the inventory it carries is never re-valued for the effects of inflation (or deflation, for that matter). So if some of the oil in it's reserve tanks are from 20 years ago and it produced it at 50 cents a gallon, and it sells this old oil at $2 / gallon market price today, it realizes an "obscene" profit of $1.50 / gallon. The mainstream media (who are mostly communications and journalism grads, one step above basket weaving) cry "gouging"!

And then you have politicians who want to appear to be "doing something" threaten the industry hearings and investigations..... for a problem originally caused by the government printing too much money!! Many of the politicians know what is really going on, but also know that most of the American public is financially and economically illiterate and thus eat up the misinformation being spewed forth!

The same thing that is happening now with oil company profits also happened in the oil crunch of the 1970s. You had the same three ingredients - LIFO accounting, massive inflation caused by Nixon taking us out of the Bretton Woods treaty and turning the dollar into a fiat currency, and the supply crunch caused by the Arab oil embargo. To satisfy demand during this crunch, the oil companies dipped into reserves carried on their books at the pre-inflation price of pennies per gallon, and sold it at the new, massively inflated market price. The media cried foul and the politicians passed new "windfall profits" taxes - all because of a crisis the government created. Back in the days when I was in school doing my MBA, my accounting professor always railed against this dishonesty on the politicians' part!

[180Marty]

[quotI don't go near Utica Energy any more than I have to. The place stinks like a still (which it is) and makes my eyes burn!! e][/quote]

Joe, There must be a lot of miserable people in Milwaukee(breweries) Just kidding. I believe from previous posts you are connected to EAA. My closest connection is I'm a friend of Jim Younkin. Anyway, just think what could happen if you paid a visit to the Madison,SD airport where SDSU is doing their testing on AGE-85 and found out facts and then got EAA involved also. You could go over to Utica and get fuel for a $1.50 or so and fly 80to90%as far per gallon. Seems like a good idea to me.

Christina, Thanks for the business lesson. Sounds like some farmers that never clean the grain bin out hoping for higher prices. Corn hit $5 per bu a few years ago, today it is $1.44 and there are a million bus. piled on the ground because there aren't enough permanent storage facilities here in Paullina.

P.S. Did you read the cattle feedlot-ethanol plant article posted a couple of days ago?
Marty [/u]

[supercubdriver]

Good afternoon:

In reality, regarding the example, what would the inventory turnover rate be? We have been led to believe there is very little inventory, i.e. short supply big demand. If this is the case, there should be very little of the "cheap" inventory to base the profit on. OR is there more of a supply out there then what we have been told?

John

[Hyrdflyr]

Supercub Driver. there is little inventory. Inventory is not profitable. Modern management principles go to great length to eliminate inventory. the producttion bottleneck is the lack of refineries. and yes, the environmental movement has made it REAL hard to get one on line.

Christina, I beg to differ. Too much theory and not enough fact. You're a very smart lady, but methinks too close to the trees to see the forest....

and I hesitate debating you, cause it's like arguing with my exwife. Can't win.

So, Respectfully, I'll just state a few observations.

I think you are confusing Inventory with Reserves in your economics lesson. Inventory is in a tank or in transit, Reserves are still in the ground, and because there has been no severence paid on them, they still are owned, most usually, by the US Government, and thats all of us, hypothetically.

The Oil companies were making record profits in 2003 at $22-25 per bl oil, in 2004, they had their best year ever on $30 to 35 per/bbl oil, and this year we're paying $55 to 60, and we're supposed to believe that stockpiled oil is sitting around in tanks and the oil companies' methods of accounting is only making it seem like the oil companies are making a killing?

A few months ago, the Day Charter Rate on crude tankers was as high as $250,000 a day for a ship that had a break even operating cost of $17,000 a day; simply because there is no profit in warehousing or storing oil, and the demand has been extreme, though lessening now, until the heating season kicks in.

They're making a killing selling oil that is 6 to 8 weeks old or less. To an oil company, reserves are oil that is discovered, and legally theirs (under lease) that they can count on. Its not the oil sitting in a tank while it awaits transportation or processing by a refinery.

At the pipeline terminus at Valdez, if the tankers are held up by weather, ice etc, they're in deep trouble capacity wise within a week to ten days. Its not a lot different at any of the refineries.

They are making this kind of dough for a few simple reasons: One is because of supply and demand, and we use all we can get at this point.

Two, is because we don't conserve and this day was coming because the establishment in this country has refused to embrace conservation and alternative energy sources, (and yes, I'm guilty as hell too).

And three, the oil companies have benefited hugely from the use of public resources, under laws and taxes, that, in large measure, they had a big influence in writing.....We've seen many huge corporations go under for various reasons in the last ten years. Can you show me any major oil companies that are in trouble?

My point in all this is not to deny them their profits, ( Hell, I"m in business also) , but to point out that they benefit hugely from the tax structure that we have in place for them largely put in place by the industry lobbyists themselves. Hell, Dick Cheney let the industry lobbyists draft our latest Energy Bill!

If you look at the corporate structure that put the current president in place, why would anybody be surprised at $60 oil?

Or a war in Iran? And Halliburton as the prime contractor?

I don't expect to change anybody's mind here, just plant a few thoughts to undermine the party line....

and yes, I think we ought to investigate ethanol, and anything else that might burn. We're going to need it.

[aceherks]

$1.44 per bushell for corn. That must be the cheapest solid heating fuel. I've seen it used is pellet stoves.

[180Marty]

Hi aceherks, I've got a corn burner in the basement. About 2 1/2 bushels is a million btu's. Works pretty good. I keep thinking we farmers should pick a target price for corn and when it goes below send it to the coal fired power plant and displace coal with a little "green" fuel.

Marty

[brown bear]

What about ethanol?
Can you say "vapor pressure?"
By the way didn't Tom Poberezny{E.A.A President} and one or two others fly ethanol powered planes at air shows a few years back?
There is a lot of danger in a little knowledge.

[180Marty]

Reid Vapor Pressure a measure of a liquid's ability to evaporate. It is
measured at 100º F, and the higher pressure indicates easier evaporation.
Gasoline is rated between 8 and 15psi, while ethanol is rated at 2.3psi.

[Christina Young]

So, Respectfully, I'll just state a few observations.

I think you are confusing Inventory with Reserves in your economics lesson. Inventory is in a tank or in transit, Reserves are still in the ground, and because there has been no severence paid on them, they still are owned, most usually, by the US Government, and thats all of us, hypothetically.

No, you are absolutely wrong. Read my post again. I kept saying "produced" for a reason. I'm talking about inventory, not reserves still in the ground.

The Oil companies were making record profits in 2003 at $22-25 per bl oil, in 2004, they had their best year ever on $30 to 35 per/bbl oil, and this year we're paying $55 to 60, and we're supposed to believe that stockpiled oil is sitting around in tanks and the oil companies' methods of accounting is only making it seem like the oil companies are making a killing?

I'm sorry, yes. All oil companies have inventory -- to protect against supply crunches just like this one that happened because of the hurricane! Yes, it has declined somewhat since the 1970s -- but nevertheless there is still quite a bit of "cheap" oil in there that has been carried on the books for years. Can you name me one example of an oil company that carries no inventory??? Or an oil company that depleted their entire stock to purge the "cheap" fuel from their inventory? In addition, in very recent years oil inventory has actually been rising, before the hurricane impacts this fall. Look at page 12 of this link: http://omrpublic.iea.org/currentissues/full.pdf . Make sure to also look at the graph at the bottom of that page. Therefore, my point stands. Can you point to contrary data to support your statement??

They're making a killing selling oil that is 6 to 8 weeks old or less.

Well, this proves my point. They were dipping into oil on their books produced at a cheaper, pre-Katrina cost (the post-Katrina cost is sure to go up due to all the repairs they have to do), and selling it at the spiked market price that happened during Katrina. Interestingly, oil inventories are larger than in a long time, but the price has gone up dramatically over the past few years mostly due to inflation.

They are making this kind of dough for a few simple reasons: One is because of supply and demand, and we use all we can get at this point.

Agreed, but you are missing inflation. MOST of the price rise of oil over the past few years has been due to inflation! Don't forget, in 2001 oil was in the $20-25 / barrel range, and gold around $270-280 / oz. What are they NOW? You can average out the inflation component from the supply & demand component using the gold price.

Two, is because we don't conserve and this day was coming because the establishment in this country has refused to embrace conservation and alternative energy sources, (and yes, I'm guilty as hell too).

Completely disagree. If alternative energy sources were efficient (and therefore cost-effective), the free market (general consuming and producing public) would select them, regardless of what the "establishment" conspires to do. The problem is that they AREN'T efficient. It takes more energy to make a solar cell, for example, than that cell is likely to produce in its entire lifetime. Net energy loss. It takes more energy to produce a gallon of ethanol than it contains... net energy loss -- and Marty you can complain about my references (that I've posted here before) all you want, but until the ethanol industry produces its ethanol USING ethanol (rather than diesel and coal like now), my point stands. The problem is that it can't. That's why they need all sorts of crazy laws forcing people to use it and Congressional pork to keep it on life support.

And three, the oil companies have benefited hugely from the use of public resources, under laws and taxes, that, in large measure, they had a big influence in writing.....We've seen many huge corporations go under for various reasons in the last ten years. Can you show me any major oil companies that are in trouble?

This is because until there is a viable (cost-effective, at least as efficient as oil) alternative, oil is the lifeblood of our economy. Oil companies are extremely well-run and efficient, and generally don't go under - they are bought out by other oil companies for their assets. I agree, by the way, tax laws should be energy-neutral. All energy types should stand or fall under their own economic merits.... even ethanol!

Hell, Dick Cheney let the industry lobbyists draft our latest Energy Bill!

Sorry, it was NOT Dick Cheney - Congress passes the bills, not the executive branch. I can't defend the energy bill - it was an abomination and should have been vetoed.

If you look at the corporate structure that put the current president in place, why would anybody be surprised at $60 oil?

Complete leftist B.S. Oil companies didn't put him in place, it was people like me. I voted for him, because he was the lesser of two evils. And I wasn't swayed one bit by any oil companies!! And your wrong - he didn't "cause" $60 oil. Again, it was mostly due to inflation, from Greenspan flooding the market with too much monetary liquidity (a "weak dollar" policy).

[Christina Young]

Interesting letter published in the Wall St Journal today puts this all in perspective (but yet no one's crying "gouging" over Microsoft!):

Uproar Over Profit? Why?

Am I missing something? The Oct. 28 Journal reported oil company profits of 10% to 12% of sales and everyone is in an uproar ("Backlash Spreads as Profits Surge at Oil Companies," page one), and Congress appears determined to interfere (again) in the market system. But on the same day, you reported that Microsoft's quarterly profit was 32% of sales ("Microsoft's Earnings Climb by 24%").

It would seem that a capital-intensive business like the petroleum industry warrants a decent profit that will encourage additional investment to solve our energy semi crisis.

Glen Holzhausen
Fallbrook, Calif.

[180Marty]

Christina, How come farmers can't get inflation to take the price per bushel of corn up where it should be relative to oil. Everything we use for inputs seems to be following---but not the end product. Also, I know for a fact that ethanol has a positive energy balance----agreed we should be using something other than natural gas for boiler fuel. I like the idea of corn or methane(hopefully you read that cattle feedlot-ethanol link). Just think what the price of corn would be around here if we weren't converting millions of bushels to fuel. I suppose everybody could take a holiday for a year and just tell the finance companies and tax man we'll get back to you later.
Marty

[180Marty]

Just thought I'd post some info from the ethanol plant annual meeting a couple of days ago. For every 24,177 btu's and .54 kwh purchased, 1 gallon of ethanol(76,000 btu's) and distillers grain byproducts left the plant. The distillers grain was either wet or dry and amounted to about 1/3 of the original volumn of corn. A little corn oil was also extracted. Another plant that I'm a member has most of this years production(50 to 65 million gals.) contracted for $1.30 per gal. while the Chicago Board of Trade price is over $2 a gal.----I wonder who is pocketing that difference?
Marty

[mvivion]

To put the politics aside for the moment, one of the biggest problems using ethanol in current generation aircraft is that, since ethanol has less energy per volume than gasoline, you'd have to carry substantially more ethanol fuel to accomplish the same trip. And ethanol based fuels aren't substantially, if any lighter than gasoline.

So, even if you can deal with the vapor pressure issue, and the natural rubber issue, you'd lose substantial range and/or useful load.

MTV

[180Marty]

Mike, If you raise the compression ratio,the 76,000 btu gal. of ethanol behaves like if has significantly more energy. Saab has a flex fuel auto now and that will be introduced in this country in a year or two that is either turbo'd or supercharged-not sure which. When running 85% ethanol they boost the engine thus raising the effective compression ratio and get similar fuel economy as when opening the wastegate and running unleaded gasoline. As far as vapor pressure, ethanol is 2.3 vs. 7 for av gas I believe, thus the need to blend a little vaporous gasoline so you can light the fire when it is cold. I still think we should be able to keep up with Brazil if we just tried a little. Who knows though, when 100LL goes away or gets even more expensive, people will rather get an STC to put low compression pistons in their 100 octane engines so they can run low octane fuel.
Marty

[180Marty]

Ethanol Plant Converting to Biomass

Posted by Cindy

Broin Companies Broin Companies of South Dakota plans to build a cellulose-to-ethanol production facility in the state of Iowa with a completion date expected in 2009.

The announcement came during a joint press conference Monday at the Iowa Capitol in Des Moines with Jeff Broin, CEO of Broin Companies, Iowa Governor Thomas Vilsack, and Iowa Governor-Elect Chet Culver.
Voyager Ethanol

Voyager Ethanol, located in Emmetsburg, Iowa, will be converted from a 50 million gallon per year (MGPY) conventional corn dry mill facility into a 125 million gallon per year commercial scale bio-refinery designed to utilize advanced corn fractionation and lignocellulosic conversion technologies to produce ethanol from corn fiber and corn stover. Broin Companies has applied for matching grant funds through the U.S. Department of Energy to assist with the project.

Known as Project LIBERTY, the expansion will utilize an existing infrastructure with projected costs for the project at just over $200 million dollars. Pilot research for this project has been conducted and the expansion is slated to begin in February with a commercial production timeline set approximately 30 months later. Project LIBERTY, which stands for Launch of an Integrated Bio-refinery with Eco-sustainable and Renewable Technologies in Y2009, will create commercialization results that include 11 percent more ethanol from a bushel of corn and 27 percent more ethanol from an acre of corn while using 83 percent less energy needed to operate a corn to ethanol plant.

[180Marty]

The news sites are all abuzz today about a pending deal that could turn the United States and Brazil into what the AP calls the “OPEC of ethanol.”

President Bush is traveling to Brazil late this week and is expected to ink the deal with Brazilian President Luiz Inacio Lula da Silva:

The deal is still being negotiated, but the two leaders are expected to sign an accord on Friday to develop standards to help turn ethanol into an internationally traded commodity, and to promote sugar cane-based ethanol production in Central America and the Caribbean to meet rising international demand.

Across Latin America’s largest country, Brazilian media were billing the Bush-Silva meeting as a bid to create a new two-state”OPEC of ethanol,” despite efforts by Brazilian and US officials to downplay the label amid concerns that whatever emerges would be viewed as a price-fixing cartel.

One point of contention expected to be addressed at the meeting is a 14-cent-a-liter U.S. tariff on Brazilian ethanol imports. This story on Bloomberg.com shows just how much the Brazilians, of course, don’t want the tax:

“If we’re going to have free commerce, then let’s have free commerce, so that people have the opportunity to buy and sell. The high tariffs the U.S. imposes on Brazilian ethanol don’t make any sense,'’ Lula said on his weekly radio address to the nation today.

Ethanol is certainly king in Brazil as eight out of 10 cars runs on the alternative fuel.