There is something funny going on.

SMSgt said:
Corn prices are really low right now, and I'm not seeing that at the pumps.
Click to expand...
Yeah, the two really aren't connected in this case.

Although we only produce alcohol for fuel from grain, we aren't producing it on the scale that I'm talking about. Generally speaking it is only an additive - about 10% added to of a gallon of gas - not a primary fuel. If we tried to produce enough alcohol to replace gasoline as a primary motor fuel, those "low" corn prices would skyrocket. More demand for the same production = higher prices. Econ101

Our high gas prices are due to reduced production relative to demand. Same demand and reduced production = higher prices. Again Econ101

HOWEVER, if the alcohol added to our gas were being produced from waste plant matter instead of grain, the prices of the gas and the grain would both be lower.
 
TXBryan said:
Dead Central Texas gas is about 3.20 right now, in small towns, and maybe 2.99 in larger 'burgs.

Not wanting to risk a political rant the politics of ethanol are, nonetheless, interesting. Back when alcohol was being considered for large-scale, and reasonably permanent, additive to gasoline, to "ease our dependency on oil resources," every relevant industry had a position.

The American Chemical Society provided testimony on Capitol Hill that their member companies could produce methanol a whole lot more economically than ethanol could be distilled from corn (and once in a while grain sorghum). They were correct but economics was a little beside the point.

The fact remained that, at the time, commodity prices, particularly corn, were depressed (as now) and Iowa hosted the first primary in the form of their caucuses. Both parties fell over themselves to provide a boost to the number one corn state's economy. This is a much simplified version but that's pretty much how ethanol, distilled from corn, got to be the gasoline fuel additive "of choice" in the U.S.

Full disclosure: I work in the ag industry and many of my fellows benefit from the practice. I'll not say a bad word about ethanol in public as too many of my cohorts are National Corn Growers Association people.

I will say that I pay close, objective, attention to the practice and there is little doubt that distillation of corn for a fuel additive is significantly more efficient than when the practice was begun and generally "pencils out" if only by a little.

The practice of making ethanol from other, usually whole plant, sources is generally known as "cellulosic" ethanol production. Though occasionally promising this practice has not "penciled out" for the most part. Cellulosic has poorer ethanol yields per ton of starting material than grain distillation thus it proves considerably more expensive despite the fact that the starting fodder is usually cheaper than corn. One of the biggest problems is cellulosic distillation plants are more complicated and expensive to build and trucking bales of switchgrass more than 30 miles ruins the economics of the venture.

The farm economy is in the proverbial toilet just now and knowledgeable ag economists forecast the cost of establishing a corn/soybean crop in the heartland this year will exceed profits making break-even cash flow a rarity and losses extremely likely. Currently almost 40% of the U.S corn crop goes to ethanol production so messing with the status quo just now would be a near death blow to U.S. farmers.

Just my two cents. Bryan
Click to expand...
OK, but if you remove the corn subsidies from the REAL price of corn and THEN compare the cost of alcohol made from corn does it really pencil out that much better than alcohol from biomass?

How about selling that 40% of corn production on the world market instead of making ethanol out of it. How does that affect the equation?

Even if it pushed the price down temporarily, I'd think the market would achieve a balance pretty quickly. Unfortunately there isn't a market for plant waste - so it goes to waste - whereas the corn wouldn't - it could be sold. The leftover stalks and leaves from the corn could even be a good portion of the waste plant matter used to produce alcohol.

If the market for corn is down, grow something else! That's what my grandfather did for over 60 years. He switched his main crop several times that I can remember. Corn & hogs, hay & cattle, hay & horses, soybeans, oats, whatever paid best at the time, that's what he raised.

The other question that comes to mind, is how much more does it cost to transporting biomass - like switchgrass or corn plant waste - than transporting grain? I'm not seeing how that is a significant factor either way - especially when the plant waste is free or nearly so.

Basically, the main point that I'm getting from most of what you posted is that corn was chosen as the alcohol production feedstock for reasons other than what was most practical.

Seems to be the way too many things "work" in the modern world. :rolleyes:
 
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taz666 said:
As for bearing wear ... I'm thinking along the line of cylinder wash down.
Once the alky get in the oil, bearing wear increases a bunch.
Click to expand...
Unless you have a lot of blowby or don't change your oil, should be a non-issue.
With gas, blowby in the oil stays in the oil and thins it out - because they are both petroleum.
With alcohol a lot more of it evaporates out rather than staying in the oil.
 
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BC38 said:
OK, but if you remove the corn subsidies from the REAL price of corn and THEN compare the cost of alcohol made from corn does it really pencil out that much better than alcohol from biomass?

How about selling that 40% of corn production on the world market instead of making ethanol out of it. How does that affect the equation?

Even if it pushed the price down temporarily, I'd think the market would achieve a balance pretty quickly. Unfortunately there isn't a market for plant waste - so it goes to waste - whereas the corn wouldn't - it could be sold. The leftover stalks and leaves from the corn could even be a good portion of the waste plant matter used to produce alcohol.

If the market for corn is down, grow something else! That's what my grandfather did for over 60 years. He switched his main crop several times that I can remember. Corn & hogs, hay & cattle, hay & horses, soybeans, oats, whatever paid best at the time, that's what he raised.

The other question that comes to mind, is how much more does it cost to transporting biomass - like switchgrass or corn plant waste - than transporting grain? I'm not seeing how that is a significant factor either way - especially when the plant waste is free or nearly so.

Basically, the main point that I'm getting from most of what you posted is that corn was chosen as the alcohol production feedstock for reasons other than what was most practical.

Seems to be the way too many things "work" in the modern world. :rolleyes:
Click to expand...

The alcohol yield from grain, on a pound for pound basis, is many fold that of plant biomass. Cellulosic sources, biomass, cannot be compacted enough to make transporting it more than a few miles worthwhile as the transportation cost far exceed the value of the biomass - that's a fact and it's getting worse not better. Cellulosic plants are far more costly than grain distillation plants as far more process is required - and good cellulosic starting material is far from "free" or practically so. Corn stalks are a very, very poor starting material for cellulosic alcohol production. Most cellulosic ethanol plants have been shuttered or sold over the last 20 years or so and there are very, very few left. Switchgrass, one of the best cellulosic starter materials, yields about 75 gallons of ethanol per dry ton whereas corn grain yield 100 gallons per dry ton and grain is considerably more space efficient per unit of weight and hence cheaper to transport. And cellulosic methods are much more complicated and expensive than distillation from grain requiring lots of extra steps - it's just economics.

The 40% of the corn going to ethanol production is very much "on the world market" as all corn, like any commodity, goes to whoever can pay for it. So selling the 40% on the market versus utilizing it for ethanol in a bit nonsensical - a bushel of corn going to a U.S. ethanol plant costs exactly the same as a bushel of corn loaded onto a ship in New Orleans headed to China if purchased on the same day. If we stopped making ethanol from corn there would be an extra 40% of it on the market and corn prices would tumble dramatically due to reduced demand and excess supply.

And growing something else is virtually not possible for more than 50% of the corn acres in this country as that is specifically what the local infrastructure is designed to accept and handle. If a Central Illinois corn/soybean farmer decided to grow an alternative crop he'd have to identify a place to haul/take it that was capable of handling/moving it. Unfortunately that means trucking it (again) and that cuts into margins amazingly fast with each and every mile. Lots of corn belt farmers can, and do, grow a variety of small grains (wheat, oats, barley, rye) and hay crops but typically rely on a corn/bean rotation for the majority of their acres. Problem is, along with corn, soybeans are at a 25 year low relative to production costs, and small grains are almost hard to give away. There is virtually nothing that is enjoying decent prices these days.

As said, cost of production currently exceeds receipts. U.S. farmers are victims of their own success and efficiency.

Lastly, the "corn subsidy" amounts to about $2B annually, which unfortunately, is a mere drop in the bucket (not very much in the grand scheme of things) and has very little effect on ethanol prices.

The "most practical" method of alcohol production for fuel additives would be methanol from crude oil fractions or fermentation of waste wood pulp. But that was not the decision made by public policy makers. BTW ethanol has been a gasoline fuel additive since the 1920s.
 
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Nevada Ed said:
I guess those of us are lucky, here in Reno, for our area, on the west coast.

Costco is at 4.25, average 4.49, Cheveron at 4.89 but

across the state line, Truckee Calif. lets you buy gas at only,
$6.39 a gallon.
Click to expand...

Wait until the electric car mandate hits, it'll go to $10/gallon to save the planet🙄. This will be right before the powers that be discover the electric grid doesn't have to capacity to support a zillion electric cars.
 
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TXBryan said:
The alcohol yield from grain, on a pound for pound basis, is many fold that of plant biomass. Cellulosic sources, biomass, cannot be compacted enough to make transporting it more than a few miles worthwhile as the transportation cost far exceed the value of the biomass - that's a fact and it's getting worse not better. Cellulosic plants are far more costly than grain distillation plants as far more process is required - and good cellulosic starting material is far from "free" or practically so. Corn stalks are a very, very poor starting material for cellulosic alcohol production. Most cellulosic ethanol plants have been shuttered or sold over the last 20 years or so and there are very, very few left. Switchgrass, one of the best cellulosic starter materials, yields about 75 gallons of ethanol per dry ton whereas corn grain yield 100 gallons per dry ton and grain is considerably more space efficient per unit of weight and hence cheaper to transport. And cellulosic methods are much more complicated and expensive than distillation from grain requiring lots of extra steps - it's just economics.

The 40% of the corn going to ethanol production is very much "on the world market" as all corn, like any commodity, goes to whoever can pay for it. So selling the 40% on the market versus utilizing it for ethanol in a bit nonsensical - a bushel of corn going to a U.S. ethanol plant costs exactly the same as a bushel of corn loaded onto a ship in New Orleans headed to China if purchased on the same day. If we stopped making ethanol from corn there would be an extra 40% of it on the market and corn prices would tumble dramatically due to reduced demand and excess supply.

And growing something else is virtually not possible for more than 50% of the corn acres in this country as that is specifically what the local infrastructure is designed to accept and handle. If a Central Illinois corn/soybean farmer decided to grow an alternative crop he'd have to identify a place to haul/take it that was capable of handling/moving it. Unfortunately that means trucking it (again) and that cuts into margins amazingly fast with each and every mile. Lots of corn belt farmers can, and do, grow a variety of small grains (wheat, oats, barley, rye) and hay crops but typically rely on a corn/bean rotation for the majority of their acres. Problem is, along with corn, soybeans are at a 25 year low relative to production costs, and small grains are almost hard to give away. There is virtually nothing that is enjoying decent prices these days.

As said, cost of production currently exceeds receipts. U.S. farmers are victims of their own success and efficiency.

Lastly, the "corn subsidy" amounts to about $2B annually, which unfortunately, is a mere drop in the bucket (not very much in the grand scheme of things) and has very little effect on ethanol prices.

The "most practical" method of alcohol production for fuel additives would be methanol from crude oil fractions or fermentation of waste wood pulp. But that was not the decision made by public policy makers. BTW ethanol has been a gasoline fuel additive since the 1920s.
Click to expand...

I guess Brazil has better plant waste to work with. ;)
Good explanation. Thanks.
 
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BC38 said:
I guess Brazil has better plant waste to work with. ;)
Good explanation. Thanks.
Click to expand...

Brazil probably has lower labor costs and regulatory overhead. Also, I'm not sure if sugar is priced on by open world market the way corn is.
 
Actually, it has been going this way on a reginal basis for longer than the mid-1970s. I was stationed in Lawton, OK and the price of gasoline doubled and halved every 30 days. Payday on base at Fort Sill was the end of the month and gas prices were $.17 per gallon. The day after payday the price was $.34 per gallon. It seems unbelievable that those prices ever existed, but in a state with an oil wells on the capital grounds, cheap gas was the norm not the exception.
 
I was just reading an article on wsj.com with a bunch of forecasts for gas prices. Many were talking $4.00 in the summer.

They were blaming refining for the most current increase. Gas is up more than oil, the crack spread is up. More than the usual number of refineries are down for maintenance, a general shortage of refining capacity, Ukraine blowing up Russkie refineries.....blah, blah, blah.

Venezuela is buying gas from us. A lack of maintenance is killing their refineries. In the long run Russia's oil business is going to die. It's extremely difficult to keep production even stable without U.S. oil service companies. There are foreign players, but they aren't on the same scale as the U.S., and they ain't playing with Russia either.
 
The price of corn for fuel is kept high by subsidies. The price for corn for food production is generally averaged out. Most corn is used for critter feed..and.oil. The grains used in Alcohol production is also used for animal feed. There is more use for corn than we think though. Wheat is a major crop for human consumption...and soybeans. Without the subsidies the price of corn would drop... less corn produced eventually everything would even up. The price of corn today in real dollars is half what it was in the 50s. More corn is produced today by the use of a lot more fertilizer new GMO seed. Weed sprays. 1950 yields on corn was about 60-70 bushels where I lived. I had one field of about 30 acres in 1985 of 169 bushels acre. Only one I remember off the top of my head. It cost close to 4 times the cost to grow that than 1950 though. BTW you can get(or could) a fuel alcohol permit. I had one. I got my best yield of alcohol to grain at about 170 proof average. And yes it would run in a properly set up engine. If farmers depended on alcohol to grow their crops today you'd need a lot more corn. I read you could not really break even. Where I live now major crop production is sugar beets for sugar and animal feed and all those grain cars on the train here go to make beer. I guess the farmers make a fair profit on that. The Coors grain elevators are always busy during the harvest
 
$3.43 @ Helena Costco yesterday, $3.59 and $3.69 at the two gas stations in Whitehall.
 
I paid $2.95 yesterday at the Sam's Club. Gas tends to be cheaper here than the National Average. Mostly because we're surrounded by refineries and transportation costs are low. Or maybe the refiners keep it low because they all live here! Something on the order of half the U.S. refining capacity is located in Texas and Louisiana.
 
Skeet 028 said:
The price of corn for fuel is kept high by subsidies. The price for corn for food production is generally averaged out. Most corn is used for critter feed..and.oil. The grains used in Alcohol production is also used for animal feed. There is more use for corn than we think though. Wheat is a major crop for human consumption...and soybeans. Without the subsidies the price of corn would drop... less corn produced eventually everything would even up. The price of corn today in real dollars is half what it was in the 50s. More corn is produced today by the use of a lot more fertilizer new GMO seed. Weed sprays. 1950 yields on corn was about 60-70 bushels where I lived. I had one field of about 30 acres in 1985 of 169 bushels acre. Only one I remember off the top of my head. It cost close to 4 times the cost to grow that than 1950 though. BTW you can get(or could) a fuel alcohol permit. I had one. I got my best yield of alcohol to grain at about 170 proof average. And yes it would run in a properly set up engine. If farmers depended on alcohol to grow their crops today you'd need a lot more corn. I read you could not really break even. Where I live now major crop production is sugar beets for sugar and animal feed and all those grain cars on the train here go to make beer. I guess the farmers make a fair profit on that. The Coors grain elevators are always busy during the harvest
Click to expand...

The "price"of corn is identical regardless of its utilization - a bushel of corn destined for alcohol production is the same as a bushel of corn headed for a feedlot or a bio-plastics manufacturer. There may be very subtle differences but corn bought on the same day from approximately similar geography all costs the same. Farmers do not make more by selling corn for one utilization versus another. Subsidies for corn-based ethanol production do not go to farmers but rather to ethanol distillers. It's a strange business when those producing do not set the price on any given day for their product.

And if the price of corn falls any further there won't be any. As previously stated the cost of production for corn and soybeans in 2024 is projected to exceed farm income. The average corn/soybean farmer in 2024 will lose money. Agreed if there was less corn it would be worth more but farms disappearing and farmers going out of business has far more consequences than commodity prices.

And yes, Brazil has an ethanol-based fuel economy and it relies on sugarcane as a starter material. Sugarcane beats corn for ethanol yield per ton of dry matter. Remember it's sugar content that mostly determines alcohol yield via fermentation and distillation. Brazil has also invested in the required infrastructure so that ethanol plants are numerous and widely scattered and hence the starting material can be more economically transported.

All "renewable" fuels controversies are, as many of you pointed out, the result of public policy decisions made by elected officials and appointed bureaucrats. They are not, necessarily, based on defensible science or economics.
 
TXBryan said:
The "price"of corn is identical regardless of its utilization - a bushel of corn destined for alcohol production is the same as a bushel of corn headed for a feedlot or a bio-plastics manufacturer. There may be very subtle differences but corn bought on the same day from approximately similar geography all costs the same. Farmers do not make more by selling corn for one utilization versus another. Subsidies for corn-based ethanol production do not go to farmers but rather to ethanol distillers. It's a strange business when those producing do not set the price on any given day for their product. .
Click to expand...
It seems that you would be right...but surprisingly that really isn't true in many areas. But like other commodities farmers lost the say in crop prices over a 100 years ago. I grew corn back east. I had 4 or 5 buyers, for my corn esp. I actually almost always got more from Chicken producers than any other buyers and less worries about moisture content. Buyers for Alcohol producers generally paid the least. I myself never contracted corn. I usually sold for higher prices to Perdue and others.15 to 25 cents a bushel does add up. And I did store some for higher winter/early spring prices. Quite often as much a dollar a bushell higher...that is where the profits came in. And the chicken producers were still always a bit higher. Subsidies almost never go to the farmers...but it has happened...especially when it comes to when large corporate farms are involved
 
BC38 said:
Our high gas prices are due to reduced production relative to demand. Same demand and reduced production = higher prices. Again Econ101
Click to expand...

steelslaver said:
The OPEC nations produce 34 million barrels of crude a day, the most the US ever produced was 20 million per day.
Click to expand...

"The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d."


United States produces more crude oil than any country, ever -
U.S. Energy Information Administration (EIA)

EIA Confirms Historic U.S. Oil Production Record

.
 
Here is some interesting facts about US oil production.

As reported bu US oil producers

In 2019, pre covid, the all time record monthly barrel per day average was in Nov at 13,000,000 barrels per day. That year 2019 US oil production averaged about 12,307,666 barrels per day

In 2023 US production averaged 12,930,083 barrels a day with new all time record months with Nov and Dec having 13,295,000 barrel a day average. That is 9.5% MORE DOMESTIC PRODUCTION, than when gas was under $2 in 2019
 
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Just more of them great gubbermint economic policies we keep hearing about!

Don't even mention the price of groceries and goods... :mad:
 
BLUEDOT37 said:
"The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d."


United States produces more crude oil than any country, ever -
U.S. Energy Information Administration (EIA)

EIA Confirms Historic U.S. Oil Production Record

.
Click to expand...
I think you missed the "relative to demand" part of my statement. Production is only half of the supply/demand equation.

Production may have increased slightly, but the demand has increased more. 4 years ago we were a NET EXPORTER of oil - producing more than we used. Today we are not. We're back to being dependent on imports to meet the demand.
 
steelslaver said:
Here is some interesting facts about US oil production.

As reported bu US oil producers

In 2019, pre covid, the all time record monthly barrel per day average was in Nov at 13,000,000 barrels per day. That year 2019 US oil production averaged about 12,307,666 barrels per day

In 2023 US production averaged 12,930,083 barrels a day with new all time record months with Nov and Dec having 13,295,000 barrel a day average. That is 9.5% MORE DOMESTIC PRODUCTION, than when gas was under $2 in 2019
Click to expand...
9.5% increased production comparing now to during the COVID lockdown is comparing apples to oranges. Demand was so low during COVID that at one point crude was priced below $0 per BARREL - they had such an excess of it they were willing to pay refineries to take it off their hands.

Now comparing the pre-COVID record of 13,000,000 per day to today's record of 13,295,000 barrels per day is valid.
But that is only an increase of 2.2%

No doubt in my mind that demand has increased more than 2.2% in the last 4+ years.

Add to that the 5%-9% compounded inflation for the last 3 years and it's no wonder gas prices are double what they were 4 years ago.
 
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I was comparing the yearly average and did make an error. But, 2023 still had a 5% increase in production from the high in 2019
12,930,038 daily average-12,307,666 daily average=622,37 increase in daaily average.
That divided by 12,307,666=.050567

As far as consumption goes in 2018 the US consumed an average of 19,417,000 barrels a day, in 2019 it was 19,424,000 and in 2022 it was 19,140,000 a day, less than 2018 or 2019. The numbers for 2023 do not appear yet, but will probably still be below 2018-19 numbers due to cost. So, demand is actually down. BTW, I know several board men at different refineries and none of them are running at their peak capacity. I just got done with a job at a refinery and am still in touch within the business.

In other words we are producing more, consuming less, yet paying more. Way more than explained by inflation. Take a look at the record profits being posted by the petroleum companies for the cause.

As far as inflation goes. Any one who believes the 8.6 trillion added between 2008 to 2016 and the 7.8 trillion added between 2016 to 2020 have nothing to do with the current inflation is seriously deluding themselves.
 
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