Friday, August 24, 2007

Time Goes By

When this blog was initiated in December of 2005 it centered around the culture of a small rural 17th century Virginian town that was feeling the interface of growth from the Washington Metro area. A local tavern seemed to bring all of the factors behind this environment together in a blend of cultures that was a mix of commuters to the metro area, local service workers, businessmen and women, and many recently- turned-21 party people who were just beginning to feel their oats. Each evening there would be a mixed population wearing business clothes, scrubs, service work shirts, and Redskin tee shirts-all joking and enjoying themselves in discussions that crossed both age and social barriers.

Sadly, a convergence of forces became effective that gradually separated these groups. By the spring of 2007, the mix had changed to only a reduced number of local workers and young party people. The social and economic diversity disappeared. The tavern could not operate with that the only customer base. August 10 was its last day of operation.

The closing marked the end of an era. The change was seriously discussed on that last night. Although there were certainly many reasons for its demise the primary mover was that the town was now inside the Washington Metro area. Its citizens now have the increased choices associated with an urban environment. The number of new restaurants and bars has made it possible for anyone to spend happy hour at an establishment largely filled with people of their own age and social/economic status. The diverse mix that made the small town tavern so interesting has been separated into several groups with more focused backgrounds and tastes.

Those of us who have hung on to the end must now make a crossroads choice. Some of us intend to go to the west where the honky-tonk neighborhood bars are still found, while others intend to go to the new and more expensive places in town or to the east. In spite of the exchange of e-mail addresses and cell phone numbers, we, like the other customers, will end up in several separate reformed groups.

Hopefully, there will still be the warm feelings of friendship which were developed over the years at the small town tavern.

We do intend to keep this blog active.

Thursday, August 16, 2007

Biofuels Enemies Can't Back Up Economic Disinformation

The last year the media has been filled with establishment organizations criticizing the cost to the government of the tax exemption for distributors blending ethanol with their gasoline. I have heard representative of both The Heritage Foundation and the Cato Institute say that these provisions in the Energy Policy Act of 2005 are “disastrous” acts by the government and that they “distort the free market”. CNBC has been especially aggressive in promoting this view.
The “think tank experts” never provide any data to back up these statements but they do prefer that large incentives continue go to the oil companies so they will be encouraged to find more oil. They also apparently feel that we should ignore strategic costs of supporting the government owned oil industries of our enemies- in the name of global free enterprise. In short helping out oil companies (either local or foreign government owned) = “good” and helping out our American ethanol industry = “bad”!

Well, the economic impact data for ethanol movement in 2006 is in. Let us examine it.

The following is a summary from the report “Contribution of the Ethanol Industry to the Economy of the United States” The summary and full report are found at these two sites:

RFA - Media Center - RFA Press Releases - 2007 Archive -Ethanol Industry Providing Sound Returns on Investment

RFA - Resource Center - Reports & Studies.

The most important points are:

1. In 2006 the federal government received tax revenues of $2.7 billion simply from the construction and operation of biofuel refineries. This is in comparison to the $2.5 billion tax exemptions granted by the federal government to oil refiners who blend ethanol-and cited by naysayers as a “waste of money”. In addition, the ethanol industry will generate nearly $2.2billion of additional tax revenue for State and Local governments.

2. The American ethanol industry alone produced nearly five billion gallons of ethanol. This meant that the US needed to import 206 million fewer barrels of oil-valued at $11.2 billion. This is money that all stayed in the American economy instead of flowing out of the country. I have never heard this mentioned in the media.

3. The operation and construction of ethanol bio-refineries spurred the creation of 163,034 jobs in all sectors of the economy in 2006. These include nearly 20,000 jobs in America’s manufacturing sector -- American jobs making ethanol from grain produced by American farmers. How about that? An American manufacturing sector that is growing!

Not included in the report was the expected savings to the federal government in grain subsidies of several billion dollars because the price of corn now exceeds the supported price. We no longer need to pay farmers not to grow corn while buying its equivalent in oil from foreign nations.

To me this just does not sound like the “economic disaster” and “waste of taxpayer money” that I have heard expressed on both network and channel news programs. I have not heard these favorable numbers mentioned or challenged in the major media.

It would seem to be newsworthy-where are the reporters?

Monday, August 13, 2007

Agriculture and Biotech Sectors Provide Fuels While Defeatists Use Disinformation

The United States is by far the global leader in biological and agricultural technology. To this, you can add the existence of our vast land resources and the strategic advantage of providing more of our own fuel. You would think that there would be little resistance to applying these advantages to our fuel shortage problem. However, like the horse drawn buggy manufacturers fighting the automobile, the fossil fuel based energy companies have fought tooth and nail to prevent renewable fuels from becoming a reality. They have done this with a vengeance that leads one to believe that John Rockefeller’s ghost has returned and is directing their operations.

As each myth is proven false, a new one is invented. The media gives each headlines, but neglects to report on the proven falsity of the previous one. Surprisingly the economic elite are eager to chug-a-lug the false kool aid while the average average person has more common sense. For the benefit of everyone, however, we will examine the facts behind each myth over the next few posts.

Today we will look at the negative energy balance myth. Following days, we will look at the claims of cost to the economy, ethanol performance in an internal combustion engine, and finally we will address the food versus fuel myth.

For quite some time the TV, newspapers, and selected think tanks have been awash with reports that the production of biofuels, especially ethanol from corn, consumed much more energy than was present in the resulting product. This was confusing because almost all studies showed just the opposite. The U. S Department of Energy initiated a study by the Argonne National Laboratory to examine all studies, resolve the difference and finally put an end to the controversy.

The final report was issued on January 7, 2005. The fossil energy to produce one million Btu of fuel was

Ethanol 740,000 Btu
Gasoline 1,230,000 Btu

That is right; it actually takes more fossil energy to produce one million BTU of gasoline than one million BTU of ethanol. Has anyone seen this in the mainstream media?

This is not surprising. The second law of thermodynamics states that it is always necessary to add energy to move from a lower to a higher energy state. It is the price you pay for upgrading a material to a new level. In the case of ethanol from corn, however, the energy comes from a free, renewable outside source-the sun. For gasoline, it comes from burning some of the other crude oil components.

The report used existing dry milling technology for ethanol and did not consider the rapidly improving technology for producing biofuels.

A summary of the study and links to the full report is found at:

This report received essentially no publicity outside of the specialized ethanol sector. Reports of a mythical negative energy balance continue to in the media. One change I have noticed is that the “negative balance” has been changed to “barely positive” in some releases. I have yet to see a comparison with the energy to manufacture gasoline.

The next post will look at the overwhelming economic and strategic benefits of this “failed and expensive” movement