Skip to comments.Behind the Ethanol Scandal
Posted on 09/18/2013 5:57:40 AM PDT by thackney
Something about this decade's economic assumptions has never made sense to me.
The idea that you can anticipate a high and rising price for fuel, regardless of demand, never made sense to me.
What I was taught in economics class was that demand encouraged supply, and at some point the two would balance.
That's what seems to be happening. Shale oil, shale gas, and new strikes around the world are dramatically increasing gas supplies and proven reserves, to the point where one-third of natural gas being pumped in North Dakota's Bakken is being flared, burned away, $100 million in gas a month.
North Dakota's Department of Mineral Resources explained this happens only when the oil flow from a well is being tested. Or, if a producer determines it "is not economically feasible" to connect the gas in a well to a pipeline, they may "seek relief" from paying taxes and royalties on it.
If something is not "economically feasible," doesn't that mean the market has cleared at a price below the cost to bring on production? At its current price of $3.67/MCF, according to the latest report on Investing.com, it's still not economically feasible.
Prices below production costs have long been the problem with ethanol. The Renewable Fuel Standard was created to bridge this gap, enabling production. The idea that traders may be exploiting this program is separate from the question of supply and demand. You wanted supply and you got it. Genetic engineering is coming to the rescue of fuel prices.
A bumper corn harvest, driven by genetically engineered seeds, is driving ethanol prices below those for unblended gasoline. This pressure is going to increase next year.
Ethanol Producer writes that cellulosic alcohol projects, which don't require food crops as fuel, are starting to come on-stream.
Science & Enterprise writes that non-fuel crops like castor beans, genetically engineered to be used as fuel, are also heading to market.
Venture-funded start-ups like Midori Renewables are preparing new catalysts that get even more fuel sugar from existing feedstocks.
So the only recourse left to oil advocates is to attack the the Renewable Fuel Standard that created all this abundance. Take away the bridge, chop off ethanol supplies at the source, and the price pressure on refiners and oil producers may abate.
Issues that appear political are often just economic, and that's the case here. Ethanol, with government aid, is now putting downward pressure on gasoline prices, and the producers of that fuel are howling about unfair competition.
But take away the market pressure of ethanol, do away with the Renewable Fuel Standard, flare enough gas in enough fields, and the market clears at the higher prices fossil fuel producers have built into their own economic models.
The lesson should be clear. The economic assumptions of this decade are wrong. There is a limit to how high natural gas and gasoline prices can rise before the market bites back. Now that this has happened, producers are squealing like stuck pigs.
s the answer to give the old-line producers the political power they need to drive new supplies from the market so that they can keep raising costs and prices? Or is it to see that squealing as a victory and increase the pressure, forcing a permanent re-examination of the fuel industries' cost structures?
The answer to that one, I think, is obvious. The war against oil is being won, and now is the time to go in for the kill.
I’d like to find the one person who is behind all this ethanol debacle and kick him in the ass.
Gaskets; seals; fuel lines; oxygen sensors; damage to filters, 2 cycle diaphragms, seats, needle valves - the whole nine yards. I’ve had to rework EVERY 2 and 4 cycle engine I have for yard and tool work because of it.
Fie! On them. May their lives have to depend on the treachery their political maneuvering has wrought.
So is that why my gas leaf blowers keep dying? I have bought two in last 5 years!
Pretty much....one thing you can do is buy something called Sea Foam which is a Marine use additive... I have a case of that stuff now and use it in all my engines...you have to read directions and make sure you have the proper mix, but it has saved me some work.
Hubby uses the nonethanol gas in our lawn equipment.
The Willys jeep gets real stuff whenever possible.
EPA mandates reformulated gasoline in my area.
With government aid (and the ethanol mandate), it is unfair competition.
And on top of that, it's running up food prices because food producers are converting to feed stocks for ethanol.
Stop distorting the market. The balance will swing back and forth, and there will be periodic inequities in pricing. But, the current meddling is making it worse.
A side effect of coast to coast cornfields is a dying bee population.
So we are paying more for fruits, nuts etc. because growers can’t pollinate effectively.
Ethanol, without federal tax dollar subsidies, would be more expensive than gasoline, while only being about 70% as efficient. As it is now, it still doesn't pay to run E85 with its decreased fuel economy.
Thanks both for the tips! I will try them and see if I can’t get more running hours out of my latest blower. They seem to die the minute the warranty runs out.
E10 has been used in cars since the 70s and most manufacturers now warranty their engines for use with 10 percent ethanol blends (and have for decades).
Antique engines, two-strokes, and four-strokes not built to handle ethanol can experience problems with E10, and storing it so as to minimize water absorption is important.
After three small engines in for repair, I followed the repairman's advice and switched to no-ethanol premium gas. No problems since then. The repairman said that his business boomed after the introduction of ethanol into regular gasoline.
Another ethanol apologist....are you a farmer or ethanol VAR?
I’ve had 4 cars in the past 10 years develop Exhaust system O2 sensor problems that constantly lit-up under certain conditions indicating a problem with the catalytic convertor....In every case it was the wideband O2 sensor that was at fault, degraded by the ethanol in the gas.
These were all your so-called “E10” cars.
Not thanks, you can save that for someone who’ll believe it.
Ethanol is DEATH to engines that are allowed to sit unused for days or weeks at a time. Most autos are started and run multiple times a day, and the tank of gas normally does not sit in the car for long (normally).
Mowers, sno-blowers, leaf blowers, BOAT engines can be expected to sit unused for days AND weeks at a time. Then the ethanol does it dirty work.
For my boat’s NEW engine, I was TOLD to disconnect the fuel line before I left for the week, re-start the engine and let it run until the internal fuel ran out and the engine died. Thus, no ethanol eating up the insides.
As the boat is taken out of the water for the winter, the remaining gas in the tank is transferred to my car and is quickly used.
This article doesn’t make any sense.
BTW. Whatever happened to “Peak Oil”.
Oh, the irony.
There is a pure-gas.org site which lists where you can find ethanol-free gas. I live in TX and would have to drive about 100 miles each way to get some gas. Maybe you will be able to find some closer to you.
If you find some place, you might want to call to make sure they still have the good gas!
Yep. And no doubt ethanol is responsble for your bunions, bad breath, and the Lindbergh kidnapping as well. The stuff is the Devil’s brew, I tell ya!