Tuesday, May 29, 2007

Big Oil Uses "Ethanol Excuse"

The American Coalition for Ethanol (ACE) has responded to recent comments by oil company executives who are attempting to blame current record high gasoline prices on the petroleum sector's concern over future ethanol growth.

"Big Oil's latest attack on ethanol is stunning, even for them," said Ron Lamberty, ACE Vice President / Market Development. "I don't think 'audacity' is an audacious enough word to describe this latest attempt to blame ethanol for Big Oil's failure to meet our energy needs."

In markets that carry ethanol-blended gasoline, ethanol blends are currently selling for as much as 10 cents per gallon less than even the lowest octane straight gasoline. All vehicles can use gasoline with 10% ethanol or less, and ethanol-enriched gas is sold in nearly half of the stations in the United States.

"Right now, ethanol may be the only reason prices haven't gone even higher," Lamberty said. "The ethanol industry continues to grow while oil refiners continue to make excuses for maintaining their profitable status quo."

In a May 24 New York Times article, executives from Shell Oil Company and Chevron are on the record saying that the nation's push for alternative fuels is placing "great risk" on decisions to expand oil production and refining capacity.

Prior to these comments, the oil industry has expressed a very different opinion of the size and scope of the ethanol industry - voicing concerns that ethanol production will never be big enough to meet the oil industry's demand. An industry spokesman even called E85 "a joke" earlier in the week.

"Last spring when oil companies shorted supply by eliminating MTBE, gas prices went up and oil companies complained that there wasn't enough ethanol," Lamberty said. "Now they're saying that they're afraid to expand because ethanol is getting too big? Which one is it?"

In hearings before Congress last year, oil company heads told of plans to increase fuel production by expanding refinery capacity by up to 1.8 million barrels per day - an increase of 10 percent over 5 years. The Times article states that, according to the DOE's Energy Information Administration, these plans have been scaled back by 60 to 80 percent.

"Big Oil has justified huge profits by explaining that they're reinvesting most of that money into increased exploration and production, but today they're saying they didn't actually do that and they don't plan to in the future. Isn't that the real story here?" Lamberty said.


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Shed No Tears for Tyson Foods

Seems that Big Meat has shown its true colors-attempting to scare consumers and farmers alike with fears of high food costs and famine while enjoying record profits. Interesting rebuttal by the corn growers below.

Shed No Tears For Poor Tyson

By Rick Tolman
CEO, National Corn Growers Association

Tyson Foods, the self-proclaimed “world’s largest processor of meats” and the second largest Fortune 500 food processor, has been a strident and leading voice in stirring up the “food versus fuel” furor. Way back in December, Tyson CEO Richard L. Bond told a group of investors: "I believe the American consumer is going to have to pay more for protein. Quite frankly, the American consumer is making a choice here ... either corn for feed or corn for fuel."

I sat in the audience at the Consumers Analyst Group of New York annual meeting in Scottsdale last March, the largest gathering of food analysts in the nation, and listened as senior officials from Tyson laid out in strong terms the negative financial impact on their company from $4+ corn and the significant increase in the cost of production they were facing from the “doubling in corn prices,” as well as their bleak future.

Later that same month I had a rather animated conversation with Tyson representatives outside of a Senate Agriculture Committee Hearing on the impact of corn prices on the livestock industry, after listening to poultry industry testimony indicating that their average corn cost for 2007 would be over $4 a bushel. I questioned that figure as an average cost when USDA was then forecasting a season average price of $3.20 a bushel. When they insisted that was what they would average, I offered to take the job of being their buyer of corn and promised to be able to significantly alleviate their costs if $4 corn was the benchmark. They declined. (And yes, this was the same hearing where a representative of the pork industry submitted written testimony stating that one could not buy corn at any price in the state of Nebraska.)

I felt even worse for Tyson after reading an article in the March 26 issue of Feedstuffs, where they reported on a recent study completed by Tufts University. The article “Broiler, hog industries save billions from corn” points out that during the 9 years between 1997 and 2005, corn was priced 23 percent below average production costs. The studied estimated that Tyson alone saved $2.59 billion dollars or $288 million a year over that time period due to low feed prices. Only $2.59 billion?

In late April, I read that Tyson had announced their second quarter and six months results for their fiscal year 2007. Brace yourself, I thought. Here is where the red ink will really and finally show up, as this matched the same time period as the increase in the price of corn. I was very surprised by what I read. Second quarter earnings per share were $.19 compared with a loss of $.37 a year earlier and earnings guidance for the full year was raised from $.50 - $.80 a share to $.65 - .90 a share with “all segments profitable” across the company. Mr. Bond reported that “quarterly operating income improved $300 million over the same period last year.” According to Mr. Bond, “this was our strongest performance since the fourth quarter of fiscal 2005.” Over that same time period, Tyson stock price has gone from just over $14 a share to about $22 a share. Wow!

I am honestly concerned about the average livestock producer and the tighter margins they face. Livestock is our number one customer and we want the livestock industry to be strong and profitable. I also am concerned about retail food prices. I have five children and they love a good hamburger or chickenburger. We certainly do not want to be a cause for significant retail price increases. And, I certainly feel badly for the plight of the poor around the world. We have a duty and an obligation to do what we can to lift their lot in life. But the fact is that nothing close to what has been reported in sensational headlines regarding the impact of the price of corn on food and on the poor has occurred.

There is no conflict between food and fuel and no need for there to be one. Most of the comments to the contrary are disingenuous and self-serving. Carefully look at the facts. American farmers, with corn producers leading the way, have, can and will meet our domestic and international commitments for food and feed and still make a significant and growing contribution to lessening our dependence on imported oil. Tyson and other critics sadly underestimate your productive capability and unfortunately tout their own self interest with misleading headlines and soundbites of fear and doom and gloom.

I for one will shed no tears for Tyson. They need no tears. Their comments and sound bites have been irresponsible, misleading and self serving.

Source: National Corn Growers Association

Friday, May 25, 2007

Fed Up Station Owner Stops Selling Gas

Something is clearly wrong when independent service stations are squeezed out of business by company-owned locations and suppiers.

In this report on CNN.com, a gas station owner in Wisconsin finally had enough trouble with his ExxonMobil-masters and protested the only way he could. He stopped selling gas.
"Somebody out there is making money at these prices, but not me," said Pollack, 57.

Now we wonder who could be making all of the money? ...

The article also detailed that other Wisconsin stations recently announced that they would focus on car repairs because selling gas was no longer profitable.

Source: CNN.com

Sunday, May 20, 2007

Hog Producer: Higher Priced Corn does not equate with higher priced meat

A Minnesota hog producer challenges some popular misconceptions about the price of food.

Judy Hanson raises corn and beans, and finishes hogs on her family farm in St. Peter, Minn. She also maintains a blog on the Internet. Hanson told her readers that after reviewing her costs and payments, higher corn prices raised the cost of her hog production by about 6 cents per pound.

Hanson says the relationship between corn and food prices is not as tight as it once was. “In fact, history tells us, the prices of corn and the price of retail meat have been decoupled,” she notes. “Looking at the years 2001-2005 shows a couple of years when the price of corn went down and the price of beef and pork went up.”

“Even though we are paying more for corn today, it has little effect on the price of meat to the consumer,” she says.

You can read more on her blog at: http://judydhanson.blogspot.com

Thursday, May 17, 2007

Does it take more energy ...?

Does it take more energy to make ethanol than is contained in ethanol?

That seems to be the question asked by consumers and industry "experts" each day.

Separating fact from fiction can often be a challenge. Some answers appear to be more right than others. And all have varying assumptions that can be confusing and contradictory. But the overwhelming evidence suggests that ethanol has been, is, and will be a positive net energy producer.

David Morris offers a wide discussion of the issue HERE. But it seems to boil down to a few key points that he lists:

The United States Department of Agriculture has done the best job of showing comparative data of all the major studies on the energetics of ethanol. This is an excellent place to understand why there are differences. The initial USDA report was done in 1995. Click here for the 1995 USDA study. An update was published in 2002. Click here for the 2002 USDA study.

David Pimentel, a Cornell University professor, has been ethanol’s most consistent critic. He has done several studies over the last few years. His latest was published in 2003. Click here for Pimentel's study. For a more recent critical analysis, see University of California Berkeley professor Tad Patzek's study, Thermodynamics of the Corn-Ethanol Biofuel Cycle (2004).

There have been several critiques of Pimentel’s methodology and numbers. Here is a brief one - Click here for the study and critique of Pimentel's work . Another much more extensive, indeed exhaustive, analysis is available here. Click here for study. To my knowledge, Pimentel has not responded to his critics nor done a detailed critique of studies that come to different conclusions.

It's worth reading mr. Morris' complete site reference. Don;t say that we didn't warn you that your head will hurt!

Source: NewRules.org

Estimating the Net Energy Balance of Corn Ethanol

Sometimes what's Old is New Again. That's the case of alarmist critics of biofuels who spout the worn-out matra that corn ethanol has negative "net energy".

This study, now nearly 12 years old, was conducted by the United States Department of Agriculture (July 1995) by Hosein Shapouri, James A. Duffield and Michael S. Graboski:

Studies conducted since the late 1970's have estimated the net energy value of corn ethanol. However, variations in data and assumptions used among the studies have resulted in a wide range of estimates. This study identifies the factors causing this wide variation and develops a more consistent estimate. We conclude that the net energy value of corn ethanol has become positive in recent years due to technological advances in ethanol conversion and increased efficiency in farm production. We show that corn ethanol is energy efficient as indicated by an energy ratio of 1.24.
Facts rarely get in the way of those with "old world" mentality. During the past 12 years, the ethanol industry has made technological and engineering advancements to make ethanol a clean, renewable domestic fuel.

Source: Governor's Ethanol Coalition

Monday, May 14, 2007

Who Should Set the Price of Corn?

An interesting opinion from the Ohio Corn Growers Association:
Who Should Set the Price of Corn?

Just two years ago, U.S. corn farmers were chastised for overproducing and collecting government support because of depressed prices. We had just harvested the second largest corn crop of 11.1 billion bushels; prices averaged $2 per bushel; and farm support payments rose.

Press reports abounded with negative articles. For example, a Puget Sound Business Journal 2005 editorial stated “Subsidies encourage overproduction of certain commodities, then underwrite their sale on the global market at prices below which farmers in South America or Africa can grow a crop.” So low corn prices are bad.

Today, increased demand for corn has driven prices higher, and farmers in the U.S. and abroad are responding to the market signals by increasing production. USDA recently announced U.S. farmers intend to plant 90.5 million acres, the most since 1944. Corn prices are hovering near $3.50 a bushel. One of the first benefits of higher prices is farm support payments will be dramatically reduced.

Now we hear higher corn prices are bad. At the World Agriculture Forum this week in St. Louis, Tyson Foods, Inc. International Vice President Rick Greubel fanned the food versus fuel flames, saying higher corn prices are the reason his company is passing the buck to consumers. Times must be tough for the world’s largest poultry producer, it only reported a $4 billion profit during the first six months of this fiscal year.

Wednesday’s Post-Dispatch cited Greubel, reporting “the cost of a boneless, skinless chicken breast has increased more than 70 percent during the past seven months.” However, Bureau of Labor Statistics (BLS), which tracks monthly retail food prices, shows a pound of boneless, skinless chicken breast rose from $3.28 in October 2006 to $3.33 in March. I’m not sure how Tyson does math, but that nickel increase reported by the government is 1.5 percent not 70 percent.

If we listen to all the rhetoric, $2 corn is too low and we are driving the world’s farmers out of business. But $3.50 corn is too high and we are starving the masses and hurting consumers. Obviously somewhere in the middle must be just right. Do the naysayers want to set the price? Before they do, I would like to remind them history is littered with centrally planned economies.

There is one simple truth about agriculture: prices go up, and prices go down. There will be years of bounty and prices will fall. Conversely, in some years demand will strain the available supplies, and prices will rise. Both will impact the market and farmers will respond accordingly. After all who can set the price of corn better than the market?

Source: Ohio Corn Growers Association

Friday, May 11, 2007

Renewable Energy Gets a Degree!

"The Future is Renewable". 40+ years ago, "plastics" was the industry every college student's mom and dad could dream and hope that their son or daughter might enter. Today, renewable energy is a fast-growing industry that will call for many new workers in the future. And Illinois State University is doing something about it.

The University's Board of Trustees approved a new bachelor's degree in renewable energy, which will include a technical sequence and an economics and public policy sequence.

According to the university, the degree is a multi-disciplinary undergraduate major that provides a broad overview of renewable energy industries.

The degree will be administered by the Department of Technology, but will draw from existing courses in the Agriculture, Economics, Health Sciences, Geography-Geology, Mathematics Politics and Government and Physics departments. The program will add one new faculty position and 40 majors are anticipated to enroll by the fourth year of the program.

The program still needs the approval of the Illinois Board of Higher Education. If approved, the program will launch in the fall of 2008.

Support for the program will initially come from a U.S. Department of Energy grant, and department resources will be used for long-term program support.

Source: Illinois State University

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Monday, May 7, 2007

Ethanol Protects the Environment

The RFA reports that Ethanol is one of the best tools to fight air pollution from vehicles. Their fact sheet includes:

FACT: Ethanol is a renewable fuel produced from plants, unlike petroleum-based fossil fuels that have a limited supply and are the major contributor of carbon dioxide emissions, a greenhouse gas.

The ethanol production process represents a carbon cycle, where plants absorb carbon dioxide during growth, "recycling" the carbon released during fuel combustion.

Source: RFA

Saturday, May 5, 2007

Fields to Fuel: Dr. Jeff Zeiger on Alternative Fuels and Oil Independence

Looking for more information on ethanol and alternative fuels? Then check out FieldstoFuel.org

Their Executive Director, Dr. Jeff Zeiger, has a video worth watching with the reasons why Ethanol, E85 and alternative fuels need to be championed.


Source: Fields to Fuel.org (via YouTube)

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Ethanol in South Dakota (video)

A great video about E85 in South Dakota


balanced food and fuel energy ethanol E85

Choose Ethanol (TV Spot)

Check out this new TV spot from DrivingEthanol:


Source: DrivingEthanol.org

Friday, May 4, 2007

Take a Few Laps with Jeff Simmons and Ethanol

Hang on tight...and take a few laps with Jeff Simmons in the driver's seat.Watch this new video from drivingethanol.org:

If you can't view the video, click HERE to go firectly to YouTube


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Tuesday, May 1, 2007

Corn Growers Conserve the Environment

Corn Growers support stewardship and conservation practices:

Corn growers’ stewardship efforts are enhanced through conservation programs and to continue the environmental gains producers have made, there must be a greater emphasis on working lands conservation programs, said the National Corn Growers Association (NCGA) to the Senate Agriculture Committee.

NCGA submitted written comments to the committee, which held a conservation hearing Tuesday to review policy recommendations for the 2007 farm bill.

“We are eager to work with Congress and the administration in the months ahead in order to develop a farm bill that ensures United States agriculture is stronger than ever,” said Ken McCauley, NCGA president. “Developing a strong and usable conservation title is important to corn growers. Our industry has made strides over the years to balance conservation needs and production agriculture."

McCauley noted that the advancement in corn production technologies over the last 70 years have led to a decrease in acres under cultivation and an increase in the number of bushels produced. He also cited modern agriculture and improvements in production efficiencies have lessened the environmental impact of food production.

NCGA’s also highlighted reduced soil erosion, improved water quality and increased wildlife habitat as environmental gains corn growers continue to make through the use of the farm bill conservation programs.

Source: National Corn Growers Association

Food Safety: USDA Recall Site

Concerned about food safety, especially the recent meat recalls we all hear about? The USDA has a special site which you can check for the latest recall information.

USDA Food Safety Inspection Services: FSIS Meat, Poultry and Egg Recall Information

Source: USDA: http://www.fsis.usda.gov/FSIS_Recalls/index.asp

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