Monday, December 21, 2009

Some Biofuel Common Sense

Here's a link to an interesting blog piece on biofuels, specifically ethanol. Conflict of interest alert: I am an investor in an ethanol distribution business, so I am definitely interested in market news/forces that impact its uses.

One of the big hits that ethanol takes is the charge that the use of foodstuffs (mostly corn) raises food prices. Folks point to recent spikes in corn costs and say "see, there you have it". As the blog piece ably points out, those spikes were far more attributable to transport costs driven by OIL prices than they were by any demand issue driven by competition by ethanol distillers.

H/T Instapundit


Anonymous said...

Interesting article as it does address a couple issues I have with BioFuel. I must say CW that I am always alarmed by either side of the story when the protagonist makes sweeping claims. I would agree with you here that this claim is silly “Because of the biofuel scam, world food prices have doubled. That is because of the global warming scare … and as a result of that, millions are dying in third world countries.”

This statement rings of compiling a hand full of statistics in an unrelated manner and throwing it all against a wall and trying to see what sticks. Just plain not good science.

The article did not address the political economic relationship present right now within the AgroFuel industry. That is where I see the largest problem. I am simply anti subsidy and the money being spent on converting food fields into fuel fields is alarming.

I think you hit on some interesting facts a few weeks ago CW. Brazil has the most advanced AgroFuel economy and they see it as a tool towards their growing Petro/Oil based finds, not a replacement.

I don't see this as an either/or argument.

Another point of agreement that we have is that BioFuel is simply not available wide scale. Also people lack of knowledge of who can use it and what cars can burn it. I have several employees who own multifuel cars and it would NEVER occur to them to put E85 into them. But that may be a symptom of the real issue here.

Gas is cheap...again. There is no real incentive to burn a cleaner, less efficient and more expensive fuel.

Mudge said...

Actually, as anyone who has tried 10% ethanol in his or her boat motor, woodchipper, lawnmower, etc has probably already learned, another drawback of ethanol is that even lower concentrations, if left unburned in a carburetor or fuel system for a month or so, can gum up seals and diaphragms causing poor or failed engine performance. And the "red" fuel stabilizers don't really cut it. You need to buy the new, and of course, more expensive, blue fuel stabilizers. Over here where boating is a main source of transportation for some people's occupations, marinas are selling pure (aka non-ethanol) gasoline. Of course, it's already a premium price with it being sold at a marina. But now that it is merely what every marina in the country sold 5 years ago, they've managed to make it sound like a new and improved product that costs even more than it would have otherwise been with annual inflation. Kind of like way back when gas station attendants use to use their legs to come pump your gas, check your oil and clean your windshield. And give you change for your couple bucks to fill the tank.
Full disclosure: I'm also invested in ethanol. But you'd never guess it with this post. It's why I'm not in business for myself.

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