American biofuel policy increases hardship on the Guatemalan poor, and you help every time you buy gasoline

Michael Giberson

Next time you see one of those “This product may contain up to 10 percent ethanol” stickers on a gas pump, ask yourself why federal government biofuel policies are forcing you to help increase hunger and hardship among poor Guatemalans.

Sure, politicians in their comfortable offices in Washington, DC, didn’t intend to help starve the world’s poor. But biofuel policy is requiring conversion of food to fuel and contributing to higher corn prices, so having that effect.

Looking at you, Iowa Congressional delegation.

Ethanol comments supply evidence that Al Gore will never again run for office

Michael Giberson

I suppose Al Gore is enjoying life and never expects to run for public office.  Clear evidence of this fact? His recent comments on ethanol:

“It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol,” said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.

“First generation ethanol I think was a mistake. The energy conversion ratios are at best very small.

“It’s hard once such a programme is put in place to deal with the lobbies that keep it going.”

He was candid about his reasons for supporting ethanol from Corn:

“One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

But Gore is not willing to throw out the biofuel baby with the corn-sweetened bathwater:

Gore supported so-called second generation technologies which do not compete with food, for example cellulosic technologies which use chemicals or enzymes to extract sugar from fibre for example in wood, waste or grass.

“I do think second and third generation that don’t compete with food prices will play an increasing role, certainly with aviation fuels.”

I’m a less able than Mr. Gore to believe that high-value fuel crops will be grown in a way that doesn’t compete with food production, but if private-citizen Gore wants to invest his own money in technology investment I wish him all the luck.

(HT to Environmental Economics.)


Algal oil for $2/gallon? Not likely any time soon.

Michael Giberson

Robert Rapier at R-Squared Energy Blog looks into recent claims by DARPA to soon have oil from algae at a cost of $2/gallon. His bottom line: “I suspect that in a couple of years we will be doing the post-mortem on this one when we find that there is no $2 algal oil to be found anywhere.”

The gold in the oceans and the gold in algae biofuels

Michael Giberson

The gold in the oceans and the gold in algal biofuel have much in common. You can develop a production process in each case, but the capital and operating costs for producing each are far too high for them to be commercially viable.

I don’t begrudge anyone trying in either case to improve upon the processes. But can we please do it with a minimum of fanfare and press releases?

That’s Robert Rapier at R-Squared Energy Blog, reacting to a news story about Solix Biofuels indicating the company was about to begin “full scale commercial operation” of its plant. Apparently in this case, “full scale commercial operation” yields about 0.4 barrels of algal oil a day.

On ethanol’s subsidy and related

Michael Giberson

Robert Rapier explains a few ins and outs of ethanol.¬† For example, he observes that ethanol producers like to claim that it is the oil company which blends ethanol into gasoline that is subsidized, not the ethanol producer itself (since the blender gets a credit against federal taxes — in fact, I just heard this claim at a Lubbock chamber of commerce energy program two days ago.) Not so fast, says Rapier:

The way the blender’s credit works is that gasoline blenders get a credit – recently reduced to $0.45/gal – against the federal gasoline taxes they have to pay for each gallon of ethanol blended into the gasoline pool. However, it is not true that this subsidy actually benefits the oil companies. Ethanol proponents like to make that claim, but any time there is talk of getting rid of the credit, they are the ones who scream loudly. You won’t hear oil companies lobbying to keep it. Thus, it should be clear who really benefits.

Rapier also explains one of the economic traps that bedevils corn-based ethanol – its heavy reliance on fossil fuel imputs for fertilizer and process heat. As a partial substitute for gasoline, when gasoline prices go up, ethanol prices also go up. But at gasoline prices are generally correlated with natural gas prices, ethanol producers find their costs going up at the same time, limiting the benefit they gain from higher ethanol prices.

(Natural gas supply conditions in the U.S. have pushed domestic natural gas prices to the low end of the traditional relationship between natural gas and oil prices, perhaps offering some temporary breathing space to ethanol producers.)

Also check out Rapier’s recent review of a book on the potential for algae-based biofuels.

Biofuels: where’s our bailout?

Lynne Kiesling

Via Ron Bailey at Reason: the biofuels industry asks where their bailout is. I had to chuckle when Ron pointed out that the Renewable Fuels Association says that they, unlike other lobbying organizations, are offering ideas instead of just asking for a handout. OK, I did more than chuckle …

Ron quotes a couple of critics of a biofuels bailout, including this choice one from Andrew Moylan from the National Taxpayers Union:

“Since corn ethanol boosters have never known a day when they weren’t benefiting from government largesse, it’s sadly predictable that their response to times of economic distress is to push for more handouts rather than consider reality-based business models. Ethanol lobbyists won’t call their latest loan and mandate schemes ‘bailouts,’ but after seeing so many other interests line up for federal cash recently, taxpayers know when they’re being shaken down. Americans should be outraged that yet another industry, especially one that is already dependent on the government, has the gall to ask them for even more of their hard-earned money.”