First OPEC wanted to be compensated if climate change legislation costs them revenue, and now this:
OPEC: give us certainty to invest
You only get a small preview of the following story, but I found the bit that is accessible to be pretty humorous:
OPEC’S producers need greater certainty over long-term oil demand if they are to justify upstream investments to bring new production capacity on stream, says the group’s secretary-general. In an interview with Petroleum Economist, Abdalla El-Badri reiterated Opec’s message that greater clarity about demand is necessary if the world expects Opec’s exporters to continue investing in new output capacity.
Uncertainty over demand yields a startling gap in the group’s 10-year outlook. Opec says demand for its crude in 2020 could reach 37m barrels a day (b/d) – up from 28.8m b/d now – or remain almost flat, reaching just 29m b/d.
It’s a dilemma, because the additional investment needed to meet the higher figure amounts to $250bn, says El-Badri. “We could use that money somewhere else; in our infrastructure or for the welfare of our people.
Sorry, but that’s just not the way the world works. All businesses would like some certainty about demand. If GM had some certainty about demand, they would never have had to declare bankruptcy. They could have just built the cars that would be demanded. But the best you can do is try to estimate where demand will end up, and make your decisions accordingly.
However, I will give some free advice. I don’t believe the world will be able to build out enough crude oil capacity to keep up with demand. (Even if demand remains flat, new capacity has to come online to compensate for depleting fields). I don’t believe biofuels can scale up enough to displace more than a small fraction of our oil consumption. I believe demand from China and India will continue to grow. I believe that oil production will soon peak (if it hasn’t already). And I believe that a lot of projects have already been delayed or canceled, increasing the likelihood of a return of supply/demand imbalances within a few years. If my musings are correct, upward pressure will continue to be the trend in oil prices, and countries that have export capacity will make a lot of money.
So nobody is going to give you certainty on demand (in fact, most people are likely to be appalled at the idea), but if it were me I would make the investments in capacity. Even though many countries will continue to attempt to migrate away from oil, demand for oil will remain strong for many years to come.
"Sorry, but that's just not the way the world works. "
Couldn't agree more Robert. Looks like OPEC will have to live in the real world, the same as the rest of us.
Regardless of what happens in the oil markets, I can't see Iran using the money for "the welfare of their people".
It almost looks like they are planting the seeds of their excuses for when they finally have to reveal that their reserves are declining/overstated. They will try to blame the west for not giving them "certainty" in 2010.
Meanwhile, the sad realities of biofuels notwithstanding, we should continue to look for all ways to reduce oil usage, with the first goal being to not need to buy anything from OPEC at all – that would give them certainty, though not the sort they want.
AS the old saying goes, the only certainties in iife are death and taxes (though not necessarily in that order)
I don't believe biofuels can scale up enough to displace more than a small fraction of our oil consumption……..
Even though many countries will continue to attempt to migrate away from oil, demand for oil will remain strong for many years to come………
•••••••••••••••••••••••••••••••
RR,
Thought provoking and thank you for sharing the snippet of this particular article as well as your own postulations.
I disagree that biofuel, perhaps a new and sleeping more profitable and seamless biofuel — won't raise its head and begin creating unheard of new volumes which will begin to offset demands for global crude oil or simply to directly offset falling supplies due to peak loss issues.
The types of fuels being historically debated upon your blog site herein will likely fall within the category which you mention – meaning that they will not significantly compete with the big picture of global crude oil volumes being quoted. Look no further than current gaga over pond scum green algae scaleups to see no consequential market volumes – even 3-4-5-6 years out. (Simply one example – I could postulate about genetically modified E-coli but won't, not here.)
Regarding your closing comment above I heartily agree. In our lifetimes and that of your own growing children – we'll continue to see crude oil derivatives still powering ICE's for the next 50 years quite easily UNLESS something disruptive breaks out of pandora's box.
And this could be a Tesla method for generating usable electricity from the ether which surrounds us or maybe even a Direct Methanol Fuel Cell (DMFC) now powering forklifts which could suddenly show up under the hoods of cars and trucks and begin quickly replacing conventional IC engines.
-Cliff
They understand that very well and I don't think that's the meaning of their question. Their question is not about market demand, but about political choices of some western governments destroying demand. For instance by forcing you and me to pay for a huge part of our self righteous neighbour's electric car which he will be able to use on round trips to places no further than 25 miles on a bad winter day. (it's double whammy because state intervention kills overall growth in any case).
OPEC doesn't make these investments. The individual countries do. If Iran or Venezuela can't meet their quotas,the Saudi's have to take up the slack. It's been that way for years. OPEC supposedly has 5M bpd spare capacity,and that's supposed to grow to 6M bpd this year. Almost all that spare capacity is in KSA.
How much of the OPEC position is simply trying to position themselves not to participate in the donations to poor nations?
İf they claim to be badly affected then they can put off demands for money sure to be made on them otherwise.
Europe is slipping back into recession. The dollar is benefitting,and that's keeping oil prices down for the US. Oil imports should drop again this year,even though consumption is expected to rise slightly. Domestic oil production is supposed to be up 190,000 bpd,and we'll add another 100,000 bpd of ethanol.
Imports dropped 1.4M bpd last year,and are expected to drop another 150,000 bpd this year….even with strong economic growth. We're moving in the right direction. Here's the link for the short term energy outlook.
http://www.eia.doe.gov/steo
Their question is not about market demand, but about political choices of some western governments destroying demand.
My whole point though is that this is not something they need to worry about. They need to go do their business, and make their best estimate as to whether those political choices have a reasonable chance of slashing demand. I would say that they do not; that the only thing that will slash demand is high prices.
RR
Who doesn't want certainty?
Anybody could profit if all markets were "certain." (One reason corn ethanol was able to expand so much: Government tax credits, mandates, subsidies, and protective tariffs provided a great deal of certainty.)
What makes a CEO great is when he or she is able to determine accurately the best course of action in uncertain markets.
I guess OPEC has just been spoiled rotten by events over the last few years. Now that they have adjusted to the paradigm, they want MORE of the same, only BETTER. Good luck with that guys!
We could use that money somewhere else; in our infrastructure or for the welfare of our people.
Oh! Now I see! Poor OPEC countries have to choose between investing in oilfields and the welfare of our people. Now I understand why people in OPEC countries tend to be so oppressed! It's all that investment in oilfields!
Warning to the West: With that line of reasoning OPEC countries will be supplying angry and motivated young men to the jihad for years… make that decades to come. Think of it as an indirect SUV-usage tax.
I wouldn't be too concerned about oil prices in the short term, RR. The Big Recession is just picking up speed. Mr. Obama's tendency to do whatever the unions want ("Trade war with China over cheap tires, with no beneficiaries in the US? No problem guys! Anything else?"), and to leave his signiture policies in the hands of the prostitutians in Congress, will cost us all dearly.
Simply one example – I could postulate about genetically modified E-coli but won't, not here.
Since wild type E. coli doesn't do photosynthesis or fuel production, it sounds as if you're talking about a genome-replacement project for E. coli. Done by 2200? 2300? 2500?
"Done by 2200? 2300? 2500?"
Does 2010 work for you Wendell?
“We incorporated genes that enabled production of biodiesel directly,” JBEI CEO Jay Keasling explained in an email published by AFP. “The engineered E. coli secretes the biodiesel from the cell, which means that we don’t need to break open the cell to get the diesel out. This saves substantially on processing cost. In addition, “the biodiesel is insoluble in water, which means that it forms a separate phase when it is secreted from the engineered E. coli — it floats to the top as any oil would. This also saves on processing costs.”
http://tinyurl.com/ydohczc
My bad. That was Optimist.
Robert, high prices can come from (destructive) government action. Have you forgotten fuel prices in the Netherlands already?
They're trying to tell our tax addict politicians : "don't do it".
I'm fully with them on this.
Does 2010 work for you Wendell?
You're asking the wrong dude Maury.
The Saudis are aware that you can pick up your tanker load of ethanol in Chicago for $1.70, this morning, or for, probably, $1.63, or so, from the plant gate.
They're probably more than a little confused that we'd continue paying farmers NOT to farm 34 Million Acres, and restrict corn ethanol production to 15 Billion Gallons/Yr. under these circumstances.
They, really, and truly, deep down in their dirty little hearts, want to threaten us to quit producing ethanol. They just can't get up the courage to say it.
EIA projects that total petroleum products consumption will rise by 180,000 bbl/d in 2010 because of the economic recovery that began in late 2009.
Projected growth in domestic output is slower in 2010, increasing by about 190,000 bbl/d,
EIA forecasts that liquid fuel net imports (including both crude oil and refined products) will fall by 150,000 bbl/d in 2010.
http://www.eia.doe.gov/steo
How can imports drop 150,000 bpd when increased domestic oil production is eaten up by increased consumer demand? Does anyone besides Rufus know the answer?
…and restrict corn ethanol production to 15 Billion Gallons/Yr. under these circumstances.
Rufus~
Exactly whom is restricting ethanol production? There are two corn-to-ethanol distilleries within 20 miles of me, and as far as I know, no one is telling them they have to limit production and they can buy as much corn as they'd like, and turn it into all the ethanol they want.
How can imports drop 150,000 bpd when increased domestic oil production is eaten up by increased consumer demand? Does anyone besides Rufus know the answer?
You have a fundamental problem right from the beginning. You are basing this on an EIA projection. As I have documented before, their projections are notoriously bad. I use them for data, not their projections.
RR
I think the 140,000 bpd difference is based on their assumption ethanol output will increase 100,000 bpd and some increased biodiesel Robert. That,or whoever prepared the report is math challenged.
"Exactly whom is restricting ethanol production?"
The EPA. The E10 market's saturated. It's time we go to E25,like Brazil. We don't have enough flexfuel vehicles or E85 pumps either. It'd be nice if we moved to hydrous ethanol too. Better energy returns.
I went over that on the last thread, Mercantile. It's still there.
The E10 market isn't saturated. Further, any E85 sold will allow more ethanol to be blended into E10. So instead of hitting us with more mandates, why don't they get busy selling out E85 in the Midwest? Of course if they could they would, and there is a reason they can't. So mandates are the way to force it upon us.
RR
Maury said ~ The EPA. The E10 market's saturated.
Maury~
Why do you think the E10 market is saturated? I live in the Corn Belt and I know of least five fuel stations around here that are thriving by selling 100% gasoline. They all have big signs in front advertising "Our gasoline contains no ethanol."
That's hardly E10 market saturation.
It's time we go to E25,like Brazil.
I think a lot car owners whose warranties would become invalid if they filled up with E25 would object to that.
Rufus said ~ I went over that on the last thread, Mercantile.
That explanation wasn't good enough. You have to do a better job of explaining whom (if anyone) is going around to ethanol stills and telling them they have to restrict their output.
You're just being silly, Mercantile.
I put up a list of "rack prices" from the EIA a couple of threads back. It showed a "rack price" in Alabama of $0.60 gal higher than Iowa.
Some Major, or Super-jobber, is Gouging the people of N. Alabama Sixty Cents for ten cents transportation.
How is E85 getting a "fair break" in N. Alabama?
We used 8,766,000 barrels of finished motor gasoline each day last week. Approximately 786,000 barrels of that was ethanol. The E10 market is saturated.
943,248 bbl/day. That's how much ethanol we'll be producing when the plants that are under construction are completed (most, I believe, this year.)
Plants Under Construction
So, you see, we won't be able to use it all with an E10 blend. And, although E85 stations, and flexfuel cars are growing in numbers, they won't be able to make up the difference.
The E10 market is saturated.
Your own numbers show under 9% before taking into a account a single drop of E85 sales. So no, the market isn't saturated. And if I wanted to sell more, I would get busy on the E85 front. Why do you think they aren't pursuing that as the primary strategy?
And, although E85 stations, and flexfuel cars are growing in numbers, they won't be able to make up the difference.
Why not? If it is cost competitive, people will demand it.
RR
Come on, RR. You know how tough the E85 route has been. The deal with UL (they're still dragging their feet on certification of pumps for E85, despite the fact that no accidents have ever been blamed on Ethanol, either in the U.S., or Brazil, to my knowledge,) blenders (usually oil companies) marking e85 up to the sky, or in cases like Memphis/N Ms, not even making it available.
A shortage of cars capable of using E85, etc. Then, the recession, and the collapse of gasoline prices last year. It's, actually, remarkable that they're making as much progress as they are.
A little $3.50 +/gal gasoline this summer, and fall, should help out nicely, though.
This is the trend that will eventually bring the Big Boys on board. Stations buying ethanol directly from the biorefinery, and selling it through Blender Pumps – thus getting the tax credit, themselves.
Hmmm. Some of us may be missing the message here from OPEC (for which read Saudi Arabia — the only country which realistically can afford expensive spare capacity; every other producer already exports as much as it can).
The underlying issue which has gripped Saudi for some time is that the European consumer pays a very high price for liquid hydrocarbons, but much of the economic rent goes to greedy hypocritical Euro-govs. From the Saudi perspective, this is simply European economic colonialism — the dusky natives get fobbed off with a pittance, while the European elite gets fat from Saudi's patrimony.
I am not asking anyone to agree with the Saudi perspective. But we should all try to understand what motivates our trade partners.
The long-term Saudi agenda is to get a fairer share of the economic rent from their diminishing mineral resources. And they have patiently been pursuing that long-term goal.
The Saudis know what their goal is. Do we in the West know ours?
Come on, RR. You know how tough the E85 route has been.
If they can make it cost competitively anywhere, they should rule the market in the Midwest. They could buy their own stations. There isn't anything preventing them from getting their product into the marketplace – except for that fact that even with the subsidies it isn't competitive.
RR
Maury asserted: "Imports dropped 1.4M bpd last year,and are expected to drop another 150,000 bpd this year….even with strong economic growth. We're moving in the right direction."
Maury — about 20% of the US workforce is either unemployed or under-employed. Tens of millions of people hurting because the US elite has exported entire industries, and the jobs that went with them. That is not "moving in the right direction".
Eventually, Reid-Pelosi-Obama will get a real jobs program going; because if they don't, they too will find themselves among the unemployed, and someone else will get industry fired back up. And when jobs start to crank back up, US energy demand will go back up too.
Declining energy demand that results in human suffering is NEVER the "right direction". The exciting challenge is to find ways to meet growing energy demands in a world with finite fossil fuels. Expand the supply of energy — that is the Right Direction!
The answer is obvious, isn't it. Put 1,200,000 people to work in high-paying jobs building 6,000 (2 per county) ethanol biorefineries, and another 10,000, or so, workers installing blender pumps.
Then, another twenty, or thirty thousand getting the feedstocks ready.
Goodbye troops in the Mideast. Goodbye sending a Billion Dollars/Day to Foreign Countries. Goodbye threats from the Saudis.
In most parts of the Midwest you can have delivered to your filling station from the biorefinery for less than $1.70/gal. That's before the $0.40/gal blender's credit is taken.
And, that's where the ethanol-haters have a problem. Obviously, with the tax credit, ethanol at $1.25 gal is Very Competitive compared to $1.93/gal gasoline.
If gasoline goes to $2.25 wholesale this summer, ethanol will be very competitive W/O Subsidies.
The ethanol-haters are on the Wrong Side of History, here. Their only hope is that the price spread doesn't narrow; and that seems very unlikely.
Obviously, with the tax credit, ethanol at $1.25 gal is Very Competitive compared to $1.93/gal gasoline.
Yet we have a situation here where you assert that ethanol production is being held back. Heck, if I could make ethanol and undercut the price of gasoline (corrected for energy content), I would start buying/building my own filling stations. Thus, no more problem with the blend wall, because I will sell out at E85.
RR
Robert, the ethanol refineries are starting to make pretty good money, again. Gasoline is no longer $1.30/gal at the pump, and the crazy corn speculation of 2008 is in the rear-view mirror.
I wouldn't bet too much against a little something like you're describing starting to take hold in the not-too-distant future.
Remember, this is basically an industry of amateurs. There are probably 150 men running multi-hundred million/yr ethanol operations that have never run anything larger than a farm, or a small-town business.
They're, actually, just now learning how to run ethanol plants. Most of their board-members are farmers. I imagine that more than a few of them are thinking,
"Geez, and now I gotta learn the Quick-Shop/fuel distribution and retail business?" Yikes!
"Questions About Biofuels’ Environmental Costs Could Alter Europe’s Policies" by James Kanter in the NYTimes on 12-Feb-2010 at p. B2:
European governments agreed in December 2008 that only biofuels that reduced greenhouse gas emissions by 35 percent compared with fossil fuels should qualify for meeting the trade bloc’s current goal.
But at the time, the governments directed the commission to investigate indirect land use change and, depending on the findings, to decide whether any changes needed to be made about which biofuels counted toward the goal.
A shortage of cars capable of using E85, etc.
That's a silly claim Dollison. Most of the flex-fuel cars on the road don't even burn E85. In fact, the drivers of many flex-fuel cars don't even know their cars could burn E85. If there were more flex-fuel cars on the road, that would only mean more flex-fuel cars not burning E85.
The only reason companies such as GM and Ford even make flex-fuel cars is so they can use the E85 loophole in how CAFE is computed to avoid paying a penalty for not reaching their CAFE goals.
Rufus, I am surprised to read that story about the blender pumps – I had assumed that was how it was being done already in corn country.
A standard gasoline pump is already a blender. Gas stations get low and high octane deliveries, and when you buy mid octane, the pump is simply blending 50/50 – no big deal to do the same for ethanol. Except for the $100k cost of a pump installation, and a new ethanol tank.
I expect people who do lots of driving will quickly learn to game the system to get the most btu's for their buck – there may already be an iphone app for that.
Watch for the engine tuners, that have set up methanol/water injection systems to catch onto this – they will have a cut price version of the Ricardo engine.
Even though doing countRy of origin labeling for gasoline is hard, doing COUNTY of origin labeling for ethanol under this situation is easy.
I hope the on site blending model catches on – that is, after all, how Brazil does it
"Expand the supply of energy — that is the Right Direction!"
I can think of at least three ways we could attain energy independence in 20 years or less Kinuach. As a nation,we simply lack the will to do so.
1. Go nuclear in a big way,and transition to electric transportation. We'd still need to fuel big rigs and aircraft,but we produce enough oil domestically for those needs.
2. Coal to liquids. US reserves of coal are massive. It would take enormous amounts of capital and manpower,but it could be done in a pinch.
3. Mine the shale. The US has 3X as much oil as the Middle East locked up in shale deposits. We could dig it up and retort it the old fashioned way. Estonia,Brazil,and China get oil from their shale. We could do it as well.
For environmental reasons,we've chosen not to take any of those routes. We've put our eggs in the biofuel basket. If we're not successful,we do have other options. For better or worse.
It will, Paul. Let's face it, after all the hyperbole, and pontificating it will boil down to PRICE. Very simple. Price.
This is still America. For better, or worse. Richer, or Poorer; it's America. After all the games have been played, and all the articles written, etc, etc. After you and I have entertained ourselves for endless day torturing the keyboard, a guy will pull up to a pump, look at the $4.25/gal, look at the Blender pump with the $2 Something price tag, and say, "heck, I'll try some of that."
And, when all is said, and done, THAT is how "America" works.
OR, we've all been wrong about the coming shortage of oil, and ethanol goes away for another 30 years. That, ALSO, is how America works.
What do you make of camelina Rufus? What intriques me is the claim that wheat farmers increase their yeilds 15% when rotating with camelina. It apparently fetches as much per acre as wheat. It does well on marginal land and can be grown with 3 inches of annual rainfall. A company called Great Plains is trying to get it down to an art. They improve the seeds,provide the seeds to farmers,and contract for the crop. There's also a feed by-product rich in Omega-3. If there's a hitch,I haven't found it yet.
I don't really know anything about it, Maury. I wish them well, but a hundred gallon, or so, an acre just doesn't "feel" like enough yield to me.
On the other hand, if they can make a buck, and the land isn't really needed for something else, well, more power to'em, I guess.
That's half the oil canola does per acre,but twice what soybeans will provide Rufus. It's a lot more economical than either. Cheap seeds,and virtually no inputs.
Biodiesel will probably never see the gallons per acre ethanol does. Still,we need it too.
“So mandates are the way to force it upon us.”
Not where I live RR. For those who do not know, I live in the USA where the rule of law allows for public participation. Our society has chosen to diversify our transportation fuel sources.
I have yet to be forced into a gas station. I have yet to be forced into car dealership to buy a big SUV. I have yet to be forced to buy a big house that uses lots of energy. If fact, I have always been free to make the choices that make sense for my family. Making choices to not use a lot of energy has been very easy.
“For environmental reasons,we've chosen not to take any of those routes. We've put our eggs in the biofuel basket.”
You could not be more wrong Maury. All of Maury's choices are being pursued but Maury please engineering takes time without a magic wand in a society that lives by the rule of law.
For example, we are 'Go nuclear in a big way'. Right now 3 big nukes are under construction in the US. One is scheduled come on line in 2013. When you consider that 10 years ago when Clinton was president, new nukes were not in the US. I expect 10 new nukes to be on line by 2020 while none of the nukes built before 1980 will be retired after 40 years. Many of the utilities with have programs to promote BEV.
The reason wind farms and biofuel production facilities expanded so rapidly is that projects were ready to go when conditions were right.
We've got two trillion barrels of oil in shale rock Kit. We know how to retort it,but we don't because of environmental concerns. Even if Shell's wildest dreams come true and they can do in-situ for $30 a barrel,we won't let them produce more than a few thousand barrels a day with it. The CO2. The water consumption. The electricity produced with fossil fuels. On and on it goes.
How many nukes would we need to power the country if the automobile fleet were all-electric? 200? 300? Three ain't gonna do squat. They'll handle some of the demand growth we have every year. Not much else.
We've got enough coal to be energy self-sufficient. Once again,we haven't gone that route because of energy concerns. Rentech has been trying to open a coal to liquids plant in Mississippi. Even though it'll pipe the CO2 to Texas for use in oil wells,environmental groups have been giving them hell.
"The reason wind farms and biofuel production facilities expanded so rapidly is that projects were ready to go when conditions were right."
"conditions" in this case means politics. Activist lawyers with no technical understanding, so-called 'environmentalist' extremists with no understanding of anything — all playing with Taxpayer Money and forcing Neo-Stalinist controls on the general population.
From a technical/economic perspective, Maury is right — there are real options such as nuclear/electric vehicle, nuclear/Coal-to-Liquid, nuclear/oil shale. But instead of pursuing real options, the Political Class is wasting scarce resources pursuing a chimera. The Political Class should listen to our gracious host: biofuels have their place, but they will not solve the problem of replacing fossil fuels.
And Rufus — let me be blunt, you are in real danger of becoming a bore. You keep throwing out silly numbers; you never address the huge tax burden that biofuels would have to adopt if they became expensive; you poo-poo real technical challenges. Basically, you are losing your credibility.
Over-promising & under-delivering may be the route to temporary success in the Political world. But it always leads to tears in the real world.
“this case means politics”
Well I was thinking more on on the line of cost of natural gas and coal. Favorable politics help to be sure and I am talking about George Bush who can be hardly called a Neo-Stalinist. Maybe the Neo-Stalinist take credit but they do not get projects built.
“But instead of pursuing real options, ..”
We are pursuing them Kinu. How hard is it for you to understand. Maybe Kinu lives in California and his Internet is censored so he can not read the link provide by Rufus who is one of the most credible here.
The chief Neo-Stalinist will announce loan guarantees for two nukes next week.
http://www.easybourse.com/bourse/actualite/southern-co-gets-conditional-nuclear-loan-guarantee-sources-798564
To be fair, I would characterize our current leadership as more of wimpy socialist rather that Neo-Stalinist. Like the Bush is Hitler (BTW Hitler was a socialist) crowd, the O is a Neo-Stalinist crowd can not actually provide examples of terrible things done to the public just fear of control.
Maybe you would like to give an example of "silly numbers," K.
It's time we go to E25, like Brazil.
Maury,
If you want to burn E25 nothing is stopping you. The next time you refuel, put 2.5 gallons of E85 and 10 gallons of E10 in your tank. That will give you a blend of just about E25.
Try it and let me know how your car runs.
We know how to retort it,but we don't because of environmental concerns. …we won't let them produce more than a few thousand barrels a day with it. The CO2. The water consumption. The electricity produced with fossil fuels. On and on it goes.
Maury~
If it ever came down to giving up driving or using the hydrocarbons locked in Colorado oil shale, the environmental concerns would quickly vanish. Americans love their cars and the freedom and flexibility it gives us too much.
If it becomes a choice of the environment, or freedom of movement and flexibility, the environment will lose.
The same would be true of coal-to-liquid fuels.
If the crunch ever comes, only the most hardened environmentalists* would object to keeping our fleet of hundreds of millions of cars and trucks from moving on liquid fuel from oil shale and coal.
___________
* Even Al Gore doesn't let his present concern for the environment keep him from flying around the world on a private jet.
So, in a direct way we support corn ethanol up to 15 Bgpy, and discourage it over that amount.
Rufus~
Support up to 15 billion gallons/year doesn't mean anyone is discouraging more than that per year.
Your pretty jaundiced if you think the owner of a corn-to-ethanol plant will only do what the Federal government directly supports.
That means you're indirectly saying that w/o mandates, subsidies, tax credits, and protective tariffs no one in the Corn Belt would have had enough initiative or gumption to get into the corn-to-ethanol business.
"If you want to burn E25 nothing is stopping you."
Nothing but the 200 mile drive. I'm in an oil state Wendell. We're lucky Texaco doesn't think Louisiana residents are in the way. Our legislature would pass a law forcing everyone to move out.
I just finished my taxes. There were all kinds of tax credits and deductions for children. More deductions for owning a home or saving for education or retirement. Louisiana had at least 20 various tax credits. The Feds even had a tax credit for buying a new car. We encourage the things we want…like ethanol,with tax credits And discourage the things we don't want….like cigarettes, with high taxes.
Tell you what Wendell. When we stop spending $200 billion a year defending Middle East oil I'll call my Congressman and complain about the $4 billion taxpayers spend on ethanol.
Wendell wrote: "If the crunch ever comes, only the most hardened environmentalists* would object to keeping our fleet of hundreds of millions of cars and trucks from moving on liquid fuel from oil shale and coal."
No doubt.
But Wendell, you know as well as I that building millions of barrels per day production capacity for any realistic technology (eg nuclear-powered Coal-to-Liquids) will be a task for the decades.
Even new capacity with conventional technology takes many years today. Minerals Management Service reports show that bringing an oil discovery in the Gulf of Mexico onto production has improved to about 4 years, and that is after previous years of leasing & exploration.
When the crunch comes, it may be emotionally satisfying for an angry population to string up anti-human environmentalists from lamp-posts, but it won't do anything to accelerate the long slow process of scaling up new fuel supply processes.
The underlying problem is the inability of the current kind of 'bought' democracy to act before a crunch. After all, simple arithmetic shows irrefutably that a Ponzi scheme like Social Security will collapse, and when it will happen. Yet the Political Class just keeps kicking the can down the road. The need for future alternatives to fossil fuels is just another example.
"but it won't do anything to accelerate the long slow process of scaling up new fuel supply processes."
That's the thinking behind biofuel mandates Kinuach. If oil is in short supply 10 years down the road,the US will be hurting a lot less if 25% of our fuel can be grown. If we sat on our butts,we'd be starting from scratch when the fit hits the shan. Look how long it took to get to 800,000 bpd. The mandate only takes us to 2.5M bpd. Still,it's better than nothing.
But Wendell, you know as well as I that building millions of barrels per day production capacity for any realistic technology (eg nuclear-powered Coal-to-Liquids) will be a task for the decades.
Not necessarily. With the proper motivation I bet it would take no more than 3-5 years. If you've studied the Manhattan Project*, you know that we built up a huge industrial complex** in only 3 1/2 years that led to the first atomic bomb explosion on the Jornada del Muerte in New Mexico.
That was laregly accomplished because one person — General Leslie Groves — was given a mission, almost unlimited funds, and virtually no Congessional oversight. It was also in an era when we thought our national survival was at stake, and no environmental impact studies or assessments were required before making something happen.
It would be tough, but if it was a question of changing life as we know it, and people agreed to lift all restraints, we could be completely coal-to-liquid, or running on oil shale in only a few years.
It would take a unified sense that we are facing a national emergency, something this country hasn't faced in a long time.
____________
* The Manhattan Project was basically an engineering project, not one of developing the scientific theory. The theory (mostly, but not all) been done in the 20's and 30's ~ making the bomb was primarily an industrial, technical, and engineering challenge.
** Among other things, huge secret industrial complexes at Oakridge, Savanna River, Hanford, Niagara Falls, and Los Alamos.
"With the proper motivation I bet it would take no more than 3-5 years. If you've studied the Manhattan Project*, you know that we built up a huge industrial complex** in only 3 1/2 years"
General Groves years later wrote a book, "Now it can be told", about the Manhattan Project. The US certainly was fortunate to have men like him around.
Groves discusses at one point in the book the process of choosing the location for one of the Manhattan Project facilities. They thought about West Virginia, but there was a young Senator, Robert Byrd, who was getting in the way. So they went to Tennessee instead.
And here we are. Decades later, General Groves has gone to his just reward — and Senator Byrd is STILL THERE! And still getting in the way. Is our democracy disfunctional, or what?
Lots certainly can be done when the chips are down. The Manhattan Project was miraculous, but it delivered only 3 bombs during the course of World War II. Building a whole new energy infrastructure will take time. The central issue is the one that RR discussed recently – scale-up. As someone once said, 9 women can't get together and decide to have a baby in 1 month – some things just take the time they have to take.
And then the successful scaled-up design has to be replicated many times to provide the very large scale of power needed to support a modern standard of living. Decades!
For now, Byrd and the rest of those old posers are wasting our limited resources and irreplaceable time on unsustatainable biofuels and bird-whackers.
Lamp-posts & ropes, people. Lamp-posts & ropes.
"Unsustainable biofuels", eh?
Are you referring to those biofuels that are replacing 12 Billion Gallons/Yr of our imported gasoline at a cost of $1.70/gal?
"Those," unsustainable biofuels?
Coal to Liquids. Yeah, That's the ticket. 🙂
Forgetting for the moment that Coal is a finite, fossil fuel, and the environmental problems associated with CTL,
Have any of you actually looked into what that COSTS? Sasol has been doing it for decades. Look up what it costs them to convert Coal to Liquids.
HINT: There's a reason why that cockamamie idea never gets anywhere.
Are you referring to those biofuels that are replacing 12 Billion Gallons/Yr of our imported gasoline at a cost of $1.70/gal?
When you make such blatantly false claims – easily refutable – it destroys any semblance of credibility you might have.
RR
Here is a link for 11,987,400,000 Gallons of Ethanol being produced in the U.S. at present.
And, Here is a link for $1.70/gal CBOT, Friday
Now, what was that about "credibility?"
Okay, I've thought it over. I suppose I should have said, "approx. 9.0 to 9.5 Billion Gallons," after allowing for 20 – 22% less mileage. Mea Culpa.
Here's something that will be music to Kinu's ears:
"Bill Gates called climate change the world's most vexing problem, and added that finding a cheap and clean energy source is more important than creating new vaccines and improving farming techniques, causes into which he has invested billion of dollars.
If he could wish for anything in the world..
..he would choose energy that is half as expensive as coal and doesn't warm the planet."
More of this story from CNN at:
http://tinyurl.com/ybsubxk
Of course, he has never put his money behind any such efforts. Whatever criticisms we may have about Khosla, we can't say he isn't trying something.
I think the current state of 2nd gen biofuels (cellulosic, algae, etc) shows perfectly the scale issues (both time and volume) that are being talked about here.
As long as there is still have the option to just buy more oil (even at triple digit prices), I can't see any Manhattan type projects being implemented by government, and no corporate concern (except perhaps Gates) could take on the risk of doing it themselves…
Even Phil Jones, the main fraudster from CRU UEA came out on BBC last night and said there hasn't been any statistically significant warming since 1995 (that's 15 years, kiddos.)
Corn ethanol is economically viable, w/o subsidies, at about $2.75/gal gasoline. That's approx. $80.00/bbl oil.
Cellulosic will, probably, need another $0.50/gal when all is said and done. That would put us in the range of $3.40 – $3.50 gal gasoline, or $115.00 to $120.00/bbl oil.
HOWEVER, we won't Always need a price 20% lower than gasoline. Don't forget the Ricardo engine. Also, all of these super little I-4 DI Turbocharged engines that are starting to come out are made to order for development into Flexfuel. This "mileage gap" should narrow, significantly, in the next few years.
Anyway, Corn is there, Now; and, cellulosic could be there in a year, or two. Again, it all depends on the price of gasoline.
“They thought about West Virginia, but there was a young Senator, Robert Byrd, who was getting in the way.”
Kinu do you know when WWII took place? Robert Byrd did not become a Senator until 1959.
Kinu do you know where West Virginia is and what they do there? West Virginia is the mountain state and they mine coal. WV export electricity produced with coal.
“biofuels and bird-whackers”
Not so much Kinu.
"Bill Gates called climate change the world's most vexing problem…"
Then Bill Gates must be in a constant state of vexation ~ the Earth's climate is dynamic, and has been changing ever since the Earth was created. It's been both hotter and colder in the past than it is now; it will be both hotter and colder in the future than it is now.
He worked as a gas-station attendant, grocery-store clerk, shipyard welder during World War II,
Must have been the world's most influential gas station attendant, eh?
Have any of you actually looked into what that COSTS? Sasol has been doing it for decades. Look up what it costs them to convert Coal to Liquids.
Rufus~
You missed the nuance in what I wrote. I said when the crunch comes, we could be running on CTL in 3-5 years.
Of course there would be huge environmental and economic costs. But if the choice meant changing our lifestyle and going to oil shale or CTL, before Americans give up our cars and the mobility they give us, we would toss away all concerns about the environmental and economic costs of oil shale and CTL.
That's why both SASOL and the Nazis used CTL – they perceived it as a national emergency, and they saw no other alternative.
I caught it, Wendell; but cellulosic becomes viable WAY before CTL. Coal to Liquids will never get in the game.
And, cellulosic can be produced locally.
Even if nothing can still beat petroleum oil products, we should still try to reduce greenhouse gas emissions by lessening dependence on petrol. Know more about biofuels by reading up on the basics: http://www.ecoseed.org/en/general-reference/green-reference/biofuels
Why on earth would GHGs need to be cut? Just stating this repeatedly ad nauseam doesn't make it so. Anybody making this claim needs to support it with documents and arguments. And with latest about face from Dr Phil Jones of UEA CRU to the BBC (current warnming not unprecedented, medieval warm period may indeed have been warmer than now), it has become a lot more difficult. Good luck. But don't just throw statements out there as though they were known facts.
Speaking of not just throwing out statements as if they were known facts:
Rufus: "cellulosic becomes viable WAY before CTL"
Is that a known fact, or is it the fact that CTL has been done at large scale before, whereas cellulosic ethanol never has been and it is not determined whether it ever can be?
Rufus: "biofuels … are replacing 12 Billion Gallons/Yr of our imported gasoline at a cost of $1.70/gal"
Is that a known fact, or did Rufus "substantiate" this claim with statistics about ethanol production which do not directly say anything one way or another about imports?
There's work being done on ethanol fuel cells. DEFC's use ethanol more efficiently than internal combustion. They also don't have the infrastructure issues of hydrogen. A fuel cell can be 80% efficient,but that efficiency is cut in half when it's under load. I'm wondering if a PHEV would enable a fuel stack to run at peak efficiency during those first 30 or 40 driving miles. If so,it would mean 4X the MPG could be achieved compared to internal combustion for at least some additional distance. Of course,tha stack would then be under load and mileage would drop. Some of you smarter guys can probably tell me if it's possible.
Actually,it could run anytime the car wasn't plugged in. A trickle charge. That way,the car could be charged when you left work. 80% efficiency is equivalent to 80 MPG,so it would take half a gallon to recharge the 40 mile range. Theoretically.
Rufus said~ …but cellulosic becomes viable WAY before CTL. Coal to Liquids will never get in the game.
Rufus~
Maybe, but probably not. We do know how to do CTL ~ The Nazis laid the basic technological groundwork in WW II ~ and we have a gazillion tons of coal in Wyoming, Montana, and Utah just sitting there.
On the other hand, cellulosic has not yet been proved to be commercially viable. Certainly, there are lots of ideas out there; Lots of lab demonstrations; A few pilot plants, but nothing yet at scale or a commerical success.
Is CTL necessarily desireable or the best course of action? No, but if an honest to God, November Sierra, national emergency ever arises, it is just sitting there waiting to be exploited.
Maury said ~ "There's work being done on ethanol fuel cells. DEFC's use ethanol more efficiently than internal combustion. They also don't have the infrastructure issues of hydrogen."
Maury~
Methanol fuel cells already exist.
Methanol fuel cells can't use ethanol.
JEDDAH, Saudi Arabia – A top Saudi energy official expressed serious concern Monday that world oil demand could peak in the next decade and said his country was preparing for that eventuality by diversifying its economic base.
http://tinyurl.com/yzgbhmg
Tiny violins are strumming all over the world.
The news release also has the Saudi guy saying "Saudi must ensure that it become the top energy exporter, including in solar power"
I wonder how, exactly, they plan to export solar power?
Algeria plans to lay cable straight to Europe. I can't imagine the Saudi's doing much of anything. Wahhabi's don't do manual labor,so they have to import Pakistani's to clean their toilets or install solar panels.
Methanol fuel cells can't use ethanol.
Maury~
My point went right over your head. Methanol fuel cells already exist, so why mess around with ethanol?
Methanol is easy to synthesize from coal, as well as from the syngas we could get from bio-gasifiers.
My point was we'd be better off forgetting about ethanol fuel cells completely and press ahead with methanol.
Pete, I gave the link to ethanol production of 11,987,400,000 gal/yr.
Now, it's either going to the pink unicorns, or it's going in our cars. If it's going in our cars it has to, by definition, come out of imports, no?
Now, it's either going to the pink unicorns, or it's going in our cars. If it's going in our cars it has to, by definition, come out of imports, no?
Of course we have been over this enough times that you know better. First, as you realized, X barrels of ethanol don't displace X barrels of oil. Further, any imports that are now going toward supporting the ethanol infrastructure instead of being refined to fuel will not be displaced. And despite your back of the envelope attempts, we really don't know how much that is.
RR
Maury said: "80% efficiency is equivalent to 80 MPG"
Or you could get 85+ mpg from dozens of diesel car models that you can buy in volume today (in Europe, at least). Or 60+ mpg if you prefer a particularly large car.
(Those are imperial gallons, admittedly)
Pete S,
That's a great link. You do have to keep in mind that these are imperial gallons (4.5L) not US gallons(3.8L), so you have to reduce the mpg by 17% for parity.
Leaving aside that detail, there are clearly lots of highly fuel efficient vehicles available there, which are not available here, in both petrol and diesel. Almost all of the mfrs on that list sell vehicles here, but hardly any of those models listed.
There is clearly lots of room for reducing oil usage here with today's technology, before we start down another long and windy fuel cell road…
We're getting way too Euro/Amero centric, here. The huge increases in demand are coming from the non-OECD countries (especially China.)
Our Price for Petrol goes up as a result of "World" Demand, not just U.S./Euro demand.
China is expected to be be producing 20 million cars/yr within a couple of years. And, when China puts 20 million cars on the road, they don't take 12, or 14 million off the road like we do. 20 million cars in China is pretty much a "net" addition.
"Kinu do you know when WWII took place? Robert Byrd did not become a Senator until 1959."
Everyone knows when WWII took place. That was when Germany & Japan had to rescue America from the evil Chimpy McBusHitler who started wars all over the place.
To be serious, Kit, I am miles from home base and quoted that point about Byrd getting in the way from memory. Maybe my recall is wrong – that has happened before. Or maybe General Groves recall was wrong.
The only thing I can find on-line is selected pages from "Now it can be told" on http://www.google.books — and on page 494, Gen. Groves refers to Senator Byrd (much more favorably) in connection with the McMahon Act — obviously don't have to explain that one to you, Kit — which was passed in July 1946.
According to the ever-reliable Wikipedia, Ku Klux Klansman Byrd entered tbe West Virginia house in 1946 (and has been in politics essentially ever since, 64 years). It may be that the good General was mistaken about the jerk in West Virginia in 1942 being Byrd – but Byrd's name certainly seems to have stuck in Groves' mind.
Saar the Climate Change Useful Idiot wrote: "we should still try to reduce greenhouse gas emissions"
Presumably you mean reduce the emissions of radiatively active gases, Saar? "Greenhouse Gas" is sooo junk science.
Since the only really important radiatively active gas is water vapor, and since 2/3 of the planet is covered with water which evaporates continuously, just how do you propose to cut the emission of water vapor?
Hmmm! Just thinking about it, what we would have to do would be cover the surface of the ocean with a thin film of some material which prevents the mass transfer of water to the atmosphere. Maybe Exxon should retroactively apply for a giant "cap n'trade" benefit for the Exxon Valdez spill?
Rufus, you are right that we are being euro/american centric. Agreed also that China will continue to increase it's oil (and all other energy) consumption – but there is absolutely nothing we can do about what China does (except to stop buying stuff from them).
However, we can influence what we do here, ideally, to make sure that we are getting off oil as quickly as they are getting on. The best way to win a bidding war is be able to use something else so you don't have to bid – let China and India fight over the scraps.
And if we lead the way in low (or no) oil technology, then we can sell it to them.
there are some things we can learn from Europe in this quest – it particularly riles me that if Ford et al can sell small diesel cars (and even pickups) there, why they won't do so here – I think America is worse off (i.e. more oil dependent) as a result.
One advantage China has in the energy game is their central command economy over our consumer economy. They can make decisions there that could only be done in wartime here. In the meantime, we are leaving the energy future largely in the hands of various companies and the consumer at large – neither of which is reknowned for strategic thinking in the nation's interest. The government is no better, as it's time horizon is only to the next election. Even the Saudis are probably doing better on long term strategy than we are.
Hmmm! Just thinking about it, what we would have to do would be cover the surface of the ocean with a thin film of some material which prevents the mass transfer of water to the atmosphere.
Kinu~
Good thinking, but then what about the CO2 exhalation of ~seven billion human beings, and the methane burps and farts of ~1.3 billion head of cattle? 😉
China is expected to be be producing 20 million cars/yr within a couple of years.
Rufus~
Although China does have the advantage of being a command government. (I was going to say dictatorship, but that may no longer be P.C.)
If oil starts to come at too much of a premium for powering all those new cars, they could make a rapid decision to start using something else — such as using their large coal reserves to switch to methanol, or mandating electric cars only in their cities.
We don't have the political flexibility (if you will) to rapidly do that, and instead, must wait for the market to do its magic.
I'm in an oil state Wendell.
Maury~
Thought you said the ethanol market was saturated. Guess that doesn't include Louisiana, right?
Rufus said: "Our Price for Petrol goes up as a result of "World" Demand, not just U.S./Euro demand."
Yes, and world demand will be reduced relative to what it would otherwise be if the US reduced its consumption (by, say, using efficient diesel cars). That's regardless of what China does. Also bear in mind that the cost of current fossil fuel inputs to ethanol will also go up in line with world demand.
"Guess that doesn't include Louisiana, right?"
We've got E10 Wendell. But,forget finding an E85 pump.
"Methanol fuel cells already exist, so why mess around with ethanol?'
You're preaching to the choir here Wendell. We should be using all the tools in the domestic box.
Pete, Paul, I'm not really up to speed on this, but didn't I read somewhere that most of the small European diesels couldn't be licensed over here without considerable safety/emissions work?
Also, Europe favors diesel with favorable tax treatment vis a vis gasoline. The U.S. doesn't. When gasoline was $4.00 gal, here, diesel was over $5.00 IIRC.
Anyway, for whatever reason, diesel just hasn't caught on much over here. You can't make the dog eat the dogfood if he doesn't like the dogfood.
Our natural "out" will be ethanol. The anti-ethanol crowd has done everything possible to kill it, but it just gets stronger. Sometimes you're on the Right side of History, and sometimes you're not. In the year of our Lord, 2010, ethanol is.
Rufus, indeed, some of the cars wouldn't meet safety requirements here – the SUV tests. But some, such as the Toyota Yaris, the Smart and the Mini, already do.
Emissions are a different story – we have placed very tough standards on NOx emissions, which rules out diesels unless they use expensive urea reduction systems. I think this is counter intuitive. We are giving up a potential 25% fuel saving for the sake of a few ppm's of NOx.
Mercedes Benz USA refused to sell the diesel smart, saying it "wouldn't sell", but they sold it in Canada, and then US folks came up here to buy diesel Smarts!
Oddly enough, an alternative way to reduce diesel NOx is with water/alcohol (methanol or ethanol) injection.
And for any pickup truck, small or large, that does real work, a diesel is a far more functional option than gasoline.
I suspect the Detroit carmakers have had a hand in the emissions rules, to keep Euro diesel competitors out.
As for the fuel pricing,that's a strange one. Diesel is usually 2-5% cheaper in Canada, I have no idea why it is more expensive in US.
That aside though, almost anyone who drives their vehicle for a living, would be better off with a diesel. Co-fuel it with CNG/ethanol/water and you are better still.
Leave the ethanol for the commuters and such, who don't want to pay the premium for diesel engines. Combine these things and you have real reductions in oil imports.
BUt as good as the diesels are, they are just not happening here, and I think that is a shame…
"Or you could get 85+ mpg from dozens of diesel car models that you can buy in volume today (in Europe, at least"
And yet,Europe imports more oil than the US. We could go the diesel route,but that doesn't break the oil addiction. Research is being done on an ethanol fuel cell that doesn't use precious metals. I like the idea of an electric car with an ethanol fuel cell to extend the range. 10 billion gallons of ethanol could do the work of 30 billion gallons of gasoline. Or 20 billion gallons of diesel.
"The anti-ethanol crowd has done everything possible to kill it, but it just gets stronger."
That's the farm lobby for you. Ethanol gets stronger when politicians thrust it upon us. That's the sum total of ethanol's strength.
Algae news story
http://www.guardian.co.uk/environment/2010/feb/13/algae-solve-pentagon-fuel-problem
Kinu
You do understand that many unrelated people have the same last name. Lumping together unrelated and incorrect facts is most likely a very poor way to draw a logical conclusion.
I just think that those who bemoan not doing something should first check to see if we are actually doing it. The nuclear industry is doing fine.
As for small cars in America. I have never had a problem finding economical transportation but it would appear that not many Americans are interested in saving energy.
Blame the car maker if you want.
…indeed, some of the cars wouldn't meet safety requirements here.
Paul,
By implication then that would mean the European streets, roads, Autobahns, Autoroutes, and Motorways are full of dangerous cars.
But does anyone think that's true? Of course not. European roadways aren't littered with crashed and burning wrecks. In fact, the accident and death rate on the German Autobahns are lower than ours.
What it may mean is that we have unrealistic, unnecessary, and redundant safety standards, and all that is necessary is an agreement between Europe, the U.S., and Japan to standardize or homologate safety standards.
One thing overlooked is the lobbying the UAW did in the 1960s and 70s to make sure US standards were different than European standards so that the European companies couldn't easily bring their cars over here without expensive testing and modification. Getting the U.S. to adopt different standards was a way for the UAW to keep some of the competition out.
I lived in Europe in the 1980s and bought a German-spec Mercedes while over there that I brought back to the U.S. I certainly didn't feel unsafe driving that car in Europe, but when I brought it to the U.S. it cost me more than $1,000 to modify it to U.S. specs. ($1,000 spent needlessly in my opinion.)
Wendell, I couldn't agree more with you – I have long been of the opinion that many (not all) of these safety rules have been aimed at keeping out competition.
It is the same in many other industries too – e.g. US voltage at 120V instead 240 like the rest of the world, etc.
I doubt your $1000 made the car one iota safer than it was to start with.
Maury,
You may or may not know, you can also use diesel (or gasoline) to run a fuel cell – an on board reformer extracts the hydrogen. In fact, this is far simpler thaan trying to store pure hydrogen on board.
The best fuel cell of all, IMO, is the direct carbon fuel cell, which has a theoretical efficiency of 100%, and can run on unrefined coal! Out put is pure CO2, so for a stationary application, you can capture pure CO2 for industrial use.
An ethanol fuel cell would be cool, to be sure, but it will be some time before it is a realistic alternative to engines.
Personally, I'd back the DCFC as it is the only one that can run on a non-liquid fuel. Run it on coal or charcoal, and all the ash (incl mercury, etc) stays put, in a controllable fashion, you would change it out like you do engine oil.
BUt for all they promise, in the 150 years since they were invented, fuel cells have found precious few commercial applications. Even the carmakers say a fuel cell car is still decade away, which in their industry means something major has to change/improve before they will produce it.
So for this decade at least, IC engines will rule the roads – but I think we should keep open as many options as possible as to what we feed them. If it's using less oil than a std gasoline engine, then we are at least displacing some imported oil.