Ethanol Subsidies Ends

OKIEGunner

OKIEGunner

New member
Over the weekend, Congress allowed the multi-billion dollar subsidy for ethanol expire. It has been in place for more than 30 years.

The subsidy went to the producers of energy, not directly to farmers. Will this change have an effect on crop production?

As I understand the issue The subsidy was paid to the oil companies to entice them to buy ethanol, which then increased the price of corn. So with that rational, I amagine Corn prices will drop 10% in the near future.

From what I have been able to compehend some subsidies for cellulosic ethanol are going to continue, meaning switchgrass, corn stalks and corn cobs.

So now what is the benefit for wildlife and habitat nuts like us?
 
Good question. Does this mean less land put into production which means less pesticides, which means more bugs for the birds, which means better chick survival rates, ect, ect. Does this mean more unworked ground that can grow up in weeds which is good for birds, I dont know the answer.
 
Ethanol still mandated by some misguided states like Missouri, allowing splash blending of ethanol in gas and requiring a minimum, ( no max), on ethanol composition of fuel sold within the state. This has resulted in complete failure of efforts to comply with clean air standards in the Kansas City metro area. Here we burn an EPA agreed upon "botique" fuel, because our air wasn't dirty enough to necessitate the national smog blend. It was chosen with assurances from the oil companies that it would save consumers a few cents a gallon. Then comes ethanol, and the state mandate that the state will not give usa waiver for, because of the ethanol requirement, and resulting evaporation rate of ethanol, we now fail the air quality standard regularily, we pay more than by a few cents for the national anti-smog blend, so far the oil industry opposes our change to the national standard, due to the nice little pricing advantage of sellng us the "botique" blend, which of course they promised would be cheaper all along. St. Louis failed the air quality standard years ago, uses the standard anti-smog blend and has fuel a few cents cheaper than we do! Classic government at work.
 
From the article I read it doesn't sound like the subsidy expring will have much impact on production at all. Sounds like the subsidy went to processors of ethanol and that they pretty much "let the subsidy expire". Tells me they can make it without it.

Big bonus that I can see is that taxpayers would not be funding the multimillion dollars subsidy for thier fuel any longer.

Nice to see this go away and actually not have a big affect on industry. Gives hopes that other thing can go away or be optimized with little to no impact on industry.
 
The price of E85 will go up a bit. And 10% ethanol is added to MN regular gas by law soon to be 15%. That's a reason the subsidy was allowed to run out. New ethanol plants are are underway and more corn will be used in ethanol. As long a crude is $100 a barrel ethanol will show a profit.

Nationwide poor corn crop for whatever reason? Crude oil price drops. And tax payers will be flipping the bill for another Billions of $$$ bail out.:(
 
OKIEGunner said:
Over the weekend, Congress allowed the multi-billion dollar subsidy for ethanol expire. It has been in place for more than 30 years.

The subsidy went to the producers of energy, not directly to farmers. Will this change have an effect on crop production?

As I understand the issue The subsidy was paid to the oil companies to entice them to buy ethanol, which then increased the price of corn. So with that rational, I amagine Corn prices will drop 10% in the near future.

From what I have been able to compehend some subsidies for cellulosic ethanol are going to continue, meaning switchgrass, corn stalks and corn cobs.

So now what is the benefit for wildlife and habitat nuts like us?
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Maybe not much of a benefit at all. The ethanol subsidy has died a well deserved death but Big Ag has not thrown there weight around on the issue mostly because of the Renewable Fuel Standard. The RFS requires refiners and importers to use a minimum amount of renewable fuel for transportation purposes.

Doing some quick and dirty math from the link below refiners will need to buy around 11-12 billion gallons of corn ethanol in 2012 to meet the standards.

http://yosemite.epa.gov/opa/admpress.nsf/0/A7CE72844710BE0A85257973006A20F3

Theorectically they could import more ethanol but based on the other link below that doesn't seem likely. Even Brazil who is supposedly an ethanol innovator buys ethanol from the U.S.

http://domesticfuel.com/2012/01/13/ethanol-exports-surge-in-2011/

Currently the U.S. produces about 14 billion gallons of ethanol. Again see link below. If memory serves 95% of current ethanol production is from corn. Again doing some quick & dirty math it doesn't look like to me that ethanol production will suffer much in 2012.

http://www.neo.ne.gov/statshtml/121.htm

Even more disturbing is the fact that the EPA intends to accelerate the RFS requirements for renewable fuel from 15 billion gallons in 2012 to 36 billion gallons in 2022.

So when we email (and we should) our representative and our senators to support CRP it might also be a good idea to enlighten them on the environmental and economic debacle that the Renewable Fuel Standard is and will ultimately become.

DB
 
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BLUF, we are STILL going to be "subsidizing" ethanol production, because the EPA has MANDATED Ethanol be put into all Gasoline. So we are still forced, by the government’s warping of the market by removing non-ethanol products, to subsidize an inferior, wasteful, and more expensive product. As long as the EPA Mandate is in place, production and demand for corn will be the same.

I'm glad we aren't directly subsidizing the producers anymore, now let's stop indirectly subsidizing them by removing the ethanol % requirements for fuel. Force Ethanol to compete in the open market without government trying to pick favorites and let's see how well they do.
 
Ethanol as we know it today will never be an answer to our dependence on foreign oil. I have heard that when the subsidy ran out that there would be a 4-5 cent increase in the price at the pump. Honestly, I don't know whey anyone would burn ethanol blended gas in their vehicle. It's certainly not cost effective. Not at 10%, 15% or 85%. I expereince a decrease in mileage even with 10%. So if there is no difference in the price of regular gas and 10% blended whey burn the 10% stuff? And when I've run 85% blend in a Flex-fuel vehicle there has pretty consistantly been a 20% decrease in miles per gallon. So if the consumers quit using ethanol blended gas what will that do to the producers?
 
DakotaZeb,

I agree, but it is getting pretty hard to find a non-Ethanol pump in some parts of the country these days.
 
jaytee said:
Good question. Does this mean less land put into production which means less pesticides, which means more bugs for the birds, which means better chick survival rates, ect, ect. Does this mean more unworked ground that can grow up in weeds which is good for birds, I dont know the answer.
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Most people have too much invested in their land to let them grow up too weeds. Weeds may be good for birds but not much else. I would rather have a good food plot with some clean nesting cover around it than let weeds go so seed.
 
Dakotazeb said:
Ethanol as we know it today will never be an answer to our dependence on foreign oil. I have heard that when the subsidy ran out that there would be a 4-5 cent increase in the price at the pump. Honestly, I don't know whey anyone would burn ethanol blended gas in their vehicle. It's certainly not cost effective. Not at 10%, 15% or 85%. I expereince a decrease in mileage even with 10%. So if there is no difference in the price of regular gas and 10% blended whey burn the 10% stuff? And when I've run 85% blend in a Flex-fuel vehicle there has pretty consistantly been a 20% decrease in miles per gallon. So if the consumers quit using ethanol blended gas what will that do to the producers?
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Absolutely right on target. Unless and until we can figure out how to produce a tremendous amount of ethanol from a source other than corn, with out the colossal amount of water used, and extracted cheaper. it's a failed economic model. What happens to the producers if ethanol would be allowed to fail? Well it won't happen, here in Missouri the politicians own shares in the ethanol production facilities, and there will be a howl you can here all the way to Saudi Arabia, from the Ag's and Investors, to save the industry. Funny, I don't hear any of those producers, beginning with the guy selling 6.00 corn, to the hedge fund investor, to the politico's, decrying the expense born by the rest of us consumers currently with this business model. Wait till the shoe's on the other foot, hello price supports, LDP's, and production credits.
 
Dakotazeb said:
Honestly, I don't know whey anyone would burn ethanol blended gas in their vehicle. It's certainly not cost effective. Not at 10%, 15% or 85%.
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Most people within the performance car/truck/motorcycle communities love E85. It's ~105 octane. It has been cooling properties than gasoline. It burns cleaner; pretty amazing how clean a disassembled engine looks compare to a typical gas engine.

I run E85 100% of the time in my drag car. In my daily driver I run it spring/summer/fall with a customer tune and increase the my turbochargers boost pressure. I only don't run it in the winter because it's a bit harder to start in cold weather IME (still starts, just takes a little more cranking).

I also like the idea of buying a fuel that can be made mostly here, rather than increasing profits for some middle-eastern country. Is making it from corn the best idea? No, but supporting the industry will hopefully allow for innovation that allows us to produce it from other sources eventually (algae perhaps).

So hopefully that helps explain why people would use E85/E98. Now that E10 crap, you're lucky if you still have the option to buy non-ethanol gas. For my older carburetor stuff, my Stihl for example, I'm less than thrilled to run ethanol-blended gas in a machine not designed to withstand it.

Yes I know there's some special stihl gas in a bottle I could buy, but it's darn expensive! For now I just try to always run my stuff dry after use.
 
What about cellulosic ethanol. I thought I heard the first plant was opening somewhere maybe Iowa?

I have to believe switchgrass vs. corn would be a huge game changer as far as simple soil erosion and clean water benefits go.

Not been to close on how the conversion effrots have been coming along. Haven't heard much either.
 
Government spent millions on wood fiber conversion to ethanol , ( read that as fast growing pine), from the 1980's to about 1995, give or take. Had Midwest Research Institute do the research at their Colorado renewable engergy center. Who knows what became of all that. Of course we all know that it's possible, the Nazi's ran the entire war machine on gassified coal, but the cost equated to about 8.00 per gallon, they didn't have a choice.
 
I think the issue with cellulosic ethanol has been the gap between theoretical production vs. actual production. Theoretical estimates indicate 100+ gallons of ethanol is possible from each dry ton of switchgrass. Actual production has struggled to reach 50 gallons per dry ton and as I understand it that level of production is not currently possible on an industrial scale.

Even if industrial production could reach 100 gallons for each dry ton produced it would mean 120 million acres needed for swithgrass production in order to meet the 2022 RFS requirement of 36 billion gallons of renewable fuel. We only have 80 million acres in corn production currently and I believe 350 million acres in crop production for the US overall. Pasture land and grazing accounts for 788 million acres in the continental United States.

It really seems that if prairie/switchgrass ever became viable a much better land use substitute for production would be western grazing lands. Many of the sources publishing information on federal grazing are biased but the numbers thrown around are eye opening. For instance 300 million acres of federal ground used for grazing yet beef produced on federal acreage only accounts for 3% of total US beef production.
 
As indicated in my original post, not all ethonal substidies will expire. The Cellulosic Ethanol projects will continue to receive federal monies. Production of cellulosic ethanol is expensive and that means those floodgates for federal monies will pour in just as in the past several decades.

Right now the Iowa facility is planning on producing 25 Million Gallons of cellulosic ethanol per year starting in 2013. Competitors British Petroleum and Abengoa plan to have their U.S.-based advanced biofuel facilities online by the end of 2013.

What this story is about is the same. An economically ineffecient fuel source being developed by companies which want government money to make more money and not risk any of their own.
 
Does anyone know at what time of year switch grass gets cut if used for cellulosic ethanol?
 
1pheas4 said:
Does anyone know at what time of year switch grass gets cut if used for cellulosic ethanol?
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Since they are trying to get energy rather than protien it would probably be at about the time or just befor the seed matures. Since it is a warm season grass that would be late July to early August. It would probably provide nesting but not hunting.
 
Good info DB and Okie. Will be interesting to see where cellulosic goes now that it is closer to actual production and that some of the big boys are getting involved too.

Energy independence will require innovation and...wind, coal, US oil, natural gas, propane and ethanol from corn and cellulosic.
 
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