Category Corn Ethanol

Rising energy prices and our diminishing supply of oil threaten our national security. Without access to energy our economy and national defense are vulnerable to collapse. As a solution to our energy needs, we hear political rhetoric to expand oil drilling, but our energy strategy requires a long term solution that means embracing alternative/renewable energy technologies such as solar and wind. It only takes a quick review of oil production statistics to realize how formidable the challenge is that we face.

According to the Energy Information Administration (EIA) in 2007, the US consumed 20.6 million barrels of oil per day (bpd) but we were only able to produce 8.5 million bpd, leaving a deficit of approximately 12.2 million bpd. This means the US needs to import 60% of its oil and at a cost of $130 per barrel, the US will spend approximately $600 billion a year on imported oil.

Oil prices have increased dramatically with an increase of 420% since 2001. The combined impact of rising prices and diminishing oil production leaves the US in a precarious position. Yet, drilling for more oil may not rectify this tenuous situation.

As an example, back in the 1980’s, drilling activity in Alaska helped to ameliorate the oil crisis of the 1970’s. Today, oil production in Alaska has declined significantly. From its peak in 1988, oil production in Alaska has decline 64%. In Figure 1, oil production in Alaska in contrasted to the price of oil per barrel from 1980 to June 2008.

Figure 1 Alaska Oil Production

When we measure the supply and demand for oil, we find in the US, it is really a supply problem. According to the EIA , US demand for oil is growing at an annual rate of one percent over the last ten years, but oil production is down 20% since 1987.

Figure 2 US Oil Production

The energy problem however, is global. The demand for oil in the US may slow, yet supply constraints driven by growing consumption in developing countries could exacerbate this already bleak picture. On a per capita basis, the US consumes approximately 25 barrels of oil per person annually or a little over 600 gallons a year. That figure greatly exceeds other countries and particularly those in developing nations such as China.

In China, oil consumption per person is only 2 barrels or 84 gallons a year. However, oil consumption in China on a per capita basis has increased 88% from 1996 to 2006 according to data from the EIA. Despite China’s one percent population growth, at its current oil consumption growth rate, China is expected to double its current oil consumption by 2015 to over 14 million bpd and exceed the US in oil consumption by 2020. China’s current oil appetite suggests that in 14 years China will require an additional 14.6 million barrels per day. Even if oil producing countries are able to produce the additional oil, those countries that are unable to meet their own needs such as the US and China, will continue to be held hostage to oil producing states.

Figure 3 China Oil Consumption per Capita

The bottom line: the energy model based on hydrocarbon fuels is broken. Neither drilling for more oil will not satisfy our energy needs nor will corn-based ethanol. We need to rapidly embrace electric vehicles using solar, wind, and fuel cell technologies to provide alternative energy solutions. It time to put energy as the most critical component of our national security. Energy should be front and center for the US election. It’s time to invest into clean and renewable energy solutions.

As energy and food prices set new world records, what can we do at home to avert the crisis? Food prices are rising because corn is diverted from food production to producing ethanol for use as fuel in motor vehicles and is exacerbated by the recent flooding in the Mid West. Oil prices continue to escalate as demand for oil in developing countries increases and supply constraints, rising production costs, and limited refining capacity constrain the supply of oil. These factors continue to weigh against homeowners that will face escalating fuel bills to heat or cool their homes. There are some viable alternative energy solutions including wind and solar as well as home insulation that should offset the rising cost of energy. As far as food for fuel, we need to break our dependence on hydrocarbons which continues to impact our climate and weather and transfer our wealth to oil producing nations

Corn Prices have increased 264% since 2005. The rising price of corn used for ethanol is causing farmers to plant more corn and less production of other grains such as wheat or soy. Lower supply of grains is driving up food prices. Rising food prices is most debilitating to the poor, especially those in developing countries.

Figure 1 Corn Prices

Growing demand for oil and questions over Peak Oil suggesting even with oil prices rising to such an elevated level, production is rather anemic. According to the Energy Information Administration (EIA) , while oil prices increased 344% since 2001, oil production from OPEC is up only 1.2% over this same period.

Figure 2 Oil Prices

According to the EIA The demand for oil in China is growing at an 8.1% CAGR over the last five years. With demand for oil growing significantly in developing countries and despite production developments in Saudi Arabia and the 5-to-8 billion deepwater Tupi oil discovery in over Brazil The Tupi announcement in January 2008 is the world’s biggest oil find since a 12-billion-barrel field discovered in 2000 in Kazakhstan according the International Herald Tribune. These new oil discoveries are often in inhospitable areas or deep ocean environments, which makes extraction costly and difficult.

Figure 3 Rig Count and OPEC Oil Production

What can we do? . Forget drilling for more oil, electric vehicles and investment into alternative energy is the only way to avert this crisis. OPEC area drilling activity is up 48% since 1998 and yet, despite dramatically higher oil prices, up 5 fold since 1998, OPEC oil production increased only 11% over 1998.

Homeowners could begin to deploy energy saving and alternative energy systems. Wind and solar energy could help reduce some of the pain. As consumer embrace hybrids, electric, and fuel cell vehicles, wind and solar should begin to offer a stronger value proposition. Energy saving tips such as compact fluorescent bulbs, on-demand hot water heaters, and thicker home insulation products should help reduce heating and cooling costs.

According to the American Wind Energy Association AWEA a turbine owner should have at least a 10 mph average wind speed and be paying at least 10 cents per Kilowatt-hour (KWH) for electricity. There are electric utility and tax credits available in some areas. There are also questions regarding zoning restrictions, and whether to connect to batteries for energy storage, or directly to your electric utility. Consult the Wind Energy Resource Atlas of the United States Wind Resource Maps to get a better understanding of wind speeds in your area.

Cost wind systems will vary depending on model and installation costs will vary by your location. The Whisper 500 from Southwest Windpower offers electric production of 538 KWK/month at 12 mph (5.4 m/s). The system weighs 155 lb (70 kg) and has blade span of 15 feet (4.5 m) and must be mounted on a tower in cement. At 538 KWH per month, that is enough energy to cover the needs a modest house with conservative electric usage. Small wind systems can range from under $1,000 to over $20,000 with a payback period of approximately five years depending on wind resources and utility rates.

Solar photovoltaic (PV) panels cost an average of $4.80 per watt according to Solarbuzz which is about $0.24 per KWH over a 20 year life of the PV system. With an average output of approximately 10.6-watts/square foot (114 w/m^2), a five KW PV systems would cover 515 square feet (47.8 sq. meters) costing approximately $36,000 before credits and tax benefits and produce about 490 KWH per month. Of course installations costs are extra, but with PV production ramping and new PV suppliers entering the market we can expect costs to decline. Federal and local tax credits as well as selling unused electric to your local utility offers economic value on the margin.

The economic value is expected to increase as costs decline and electric rates increase and we can expect significantly higher utility rates in the near future. The economics of zero carbon emissions is not even measured as a benefit to the consumer. We are just beginning to see the cost impact of extreme weather and climate change.

Consumers should try to ameliorate the rising cost of energy by investing into solar and wind. There are several companies offering complete installation services. Among these include: Akeena Solar (AKNS) in California and The Solar Center in New Jersey.

The bottom line: energy and food prices are creating a crisis for consumers globally and there are several initiatives that could help minimize the pain. In addition, the erratic weather patterns around the world may be just a prelude to climate changes due to the impact of carbon dioxide on climate, which may cost us much more in the long run. Let’s stop the drain of wealth cause by oil and invest into clean and renewable energy solutions.

With the infinite wisdom of the White House and U.S. Congress, food prices are now directly tied to the price oil. The price of corn-based ethanol is now determined by the price of gasoline that it substitutes in motor vehicles and that price is established by supply and demand for oil. The price of gasoline at your local gas station or convenience store is based on the price of oil. And now that the price of corn is rising because it is tied directly to oil, the price of other grains and subsequently, prices along the entire food chain are rising.

Corn Prices have increased 166% since 2005. The rising price of corn that is used to produce corn ethanol is causing farmers to direct their limited resources to grow more corn, which means other grains such as wheat or soy become scarce and their prices rise. The growing scarcity of grains for food products is raising price across the food chain. Developing a renewable energy solutions based on diverting food as a substitute for expensive gasoline forces food supplies to become scare and expensive.

It is the supply and demand for gasoline and diesel fuels that establishes the price at the pump. When corn ethanol is substituted for gasoline, prices tend to gravitate towards a mean price that continues to rise to keep pace with the escalating price of crude oil now over $110 per barrel. Corn prices are inextricably linked to oil prices and in turn; corn prices impact other grain prices that means it cost more to feed your family or to feed livestock and forces those prices higher.

The rise in corn prices is illustrated in Figure 1.

Figure 1 Corn Prices

Irrespective of the timing of Peak Oil, a long-term energy strategy is required. The days of cheap oil are over. Remember how oil production in Alaska helped ease the U.S demand for foreign oil a couple of decades ago. Oil production in Alaska declined by nearly 75 percent from its peak in 1987 according a Washington Post article back in 2005. In November 2007, the Petroleum News indicated production in Alaska is expected to decline further in the future. The U.S. depends on oil production in the Gulf of Mexico for about 25% of our supply, according to the Department of Energy which is why the impact from Hurricane Katrina was so devastating.

Diminishing supply and rising demand suggests oil prices should continue to remain elevated. The rising motor vehicle usage in China (China Motor Vehicle Registration)
and India continues to influence the demand for oil.

Figure 2 Vehicle Registrations in China

Figure 2 and Figure 3 illustrate the rising use of motor vehicles in developing countries. This trends should continue and in turn, increase the demand for oil.

Figure 3 Automobile Sales in India

Maybe we should look to some leading countries in the development of alternative energy strategies. Perhaps we can learn from Norway’s HyNor Project. Solar photovoltaic projects being lead by Germany
and Spain.

So the next time you fill your tank or when you’re at your local food store and find that your wages don’t quite cover your food bill, ask your local Congressional representative for better planning on alternative energy strategies and solutions. Investment and research into solar, wind, electric vehicles, and hydrogen energy could provide real solutions by addressing energy needs, climate concerns, the environment, and food prices.

Ethanol may emit less CO2 and help reduce the demand for foreign oil in the short term, but ethanol and in particular, corn-based ethanol raises food prices, is less efficient than gasoline, diesel, and biodiesel, and is not a substitute for oil.

According to research compiled by National Geographic Magazine , the energy balance of corn ethanol, (the amount hydrocarbon fuel required to produce a unit of ethanol) is 1-to-1.3 whereas for sugar cane ethanol the ratio is 1-to-8. This suggests corn-based ethanol requires significantly more energy to produce than sugar cane ethanol. Corn ethanol is only marginally positive.

A major issue with corn ethanol is its impact on corn prices and subsequently, food prices in general. It is the price of oil that is impacting the price of corn because nearly all ethanol produced in the U.S. is derived from corn. Therefore, corn prices are inextricably linked to oil prices as well as to the supply and demand of corn as food and feedstock. Corn Prices while volatile and impacted from weather and other variables appear to follow the rising price of oil as illustrated in Figure 1. In turn, corn prices are also influencing other commodity prices where corn is used for feed for livestock.

The rising motor vehicle usage in China and India is escalating the already tenuous situation in the oil markets. With ethanol tied to oil prices we are beginning to see corn prices exacerbate the inflationary pressures at the retail level. Over the last year consumers are paying more for food with large increases in the prices of eggs, cereal poultry, pork, and beef which are tied to corn.

Figure 1 Corn Prices

Senate legislation for Renewable Fuels Standard calls for ethanol production to increase to 36 billion gallons by 2022 with 21 billion derived from as cellulosic material such as plant fiber and switchgrass . Corn is expected to comprise 42% of the ethanol production in 2002 from virtually all today. The fact is that ethanol production at its current level of 6 billion gallons equates to only 4% of our gasoline usage and is already impacting food prices. Gasoline consumption in 2005 amounted to 3.3 billion barrels or 140 billion gallons. Current estimates put gasoline consumption at 144 billion gallons a year in 2007. Even if vehicles could run entirely on ethanol, there is not enough corn harvest to substitute our demand for oil. We need a cohesive and coordinated effort using multiple technologies to develop alternative energies to reduce our dependence on foreign oil.

Performance

According to Renewable Fuels Association ETHANOL FACTS:
ENGINE PERFORMANCE, ethanol offers higher engine performance with octane rating of 113 in comparison to 87 for gasoline and has a long history in the racing circuit. In 2007, the Indy Racing League, sponsors of the Indianapolis 500 started using ethanol in racecars. However, the higher engine performance may come at a cost of lower fuel efficiency.

Table 1 Specific Energy, Energy Density & CO2

Efficiency

Gasoline offers 56% higher energy efficiency (specific energy) over ethanol as measured by kilo-joules per gram (kj/g). (As a reference: 1 kilowatt-hour = 3,600 kilojoules = 3,412 British Thermal Units) Biodiesel with 35 kj/g is 33% more energy efficient than ethanol at 24.7 kj/g.

In terms of energy density, ethanol would require larger storage capacity to meet the same energy output of gasoline diesel, and biodiesel. Ethanol requires a storage tank 48% larger than gasoline and 41% larger than diesel for the same energy output.
Please see Hydrogen Properties and Energy Units

For a quick review of Specific Energy and Energy Density – (Molecular Weight Calculator) the specific energy of a fuel relates the inherent energy of the fuel relative to its weight and is measured in kilo-joules per gram.

CO2 Emission

The molecular weight of CO2 is approximately 44 with two oxygen molecules with an approximately weight of 32 and one carbon atom with a weight of 12. During the combustion process, oxygen is taken from the atmosphere producing more CO2 then the actual weight of the fuel. In the combustion process a gallon of gasoline weighing a little over six pounds produces 22 pounds of CO2.

CO2 emission is a function of the carbon concentration in the fuel and the combustion process. During combustion ethanol produces approximately 13 pounds of CO2 per gallon. Gasoline and diesel produce approximately 22 and 20 pounds per gallon, respectively. CO2 emissions per gallon appear quite favorable for ethanol. However, the results are less dramatic when CO2 emissions are compared per unit of energy produced.

Figure 2 CO2 per KWH

When measured in pounds of CO2 per kilowatt-hours (KWH) of energy, the results show ethanol producing 6% less CO2 than diesel or biodiesel and 5% less than gasoline. In the case of ethanol, the lower specific energy of the fuel negates the benefit of its lower CO2 emissions. Meaning more ethanol is consumed to travel the same distance as gasoline or diesel thereby limiting the benefit of its lower CO2 emissions.

The bottom line is ethanol does not ameliorate our dependence on foreign oil and while it demonstrates higher performance for racecars, it is still less efficient than gasoline diesel, and biodiesel, and diverts food production away from providing for people and livestock. The reality is there are special interest groups that obfuscate the facts about ethanol for their own benefit. The real solution to our imminent energy crisis is alternative energies including cellulosic ethanol, solar, hydrogen fuel cells, and wind.