Install the app
How to install the app on iOS

Follow along with the video below to see how to install our site as a web app on your home screen.

Note: This feature may not be available in some browsers.

  • Don't miss out on all the fun! Register on our forums to post and have added features! Membership levels include a FREE membership tier.

Oil hits another record

Here's the entire article

Posted Monday, May 12, 2008 4:29 PM

In Defense of Ethanol
Sharon Begley

In the 12 years that I have speaking to him, Robert Zubrin has never disappointed. Whether he was devising a bargain-basement way to mount a manned mission to Mars (rather than taking along the fuel you need for the return trip, produce it from compounds in the Martian atmosphere once you get there, founding Pioneer Astronautics or serving as president of the Mars Society, Zubrin has never let conventional wisdom get in his way.

Amid the avalanche of new books on energy, Zubrin’s—Energy Victor: Winning the War on Terror by Breaking Free of Oil—also goes its own way. Rather than focusing on energy sources that will reduce the world’s emissions of climate-changing greenhouse gases, he has one goal, and one goal only: breaking the stranglehold that despots from the Middle East to South America to Africa have on the world’s oil supply.

Zubrin was understandably not happy, therefore, when I disparagedthe use of corn ethanol for fuel, pointing out that its greenhouse benefit is somewhere between small and nonexistent. Zubrin is an ethanol booster for one basic reason: it has the potential to wean the U.S. off imported oil. And he doesn’t buy the claim that diverting a large fraction of the corn harvest to ethanol plants is causing world grain prices—and U.S. food prices—to skyrocket. His arguments:

*Diverting corn for ethanol is not cutting in to food production, he says. “Here are the facts,” he told me in an email. “In 2002, the United States grew 9.0 billion bushels of corn, and turned 1.1 billion bushels into . . . 3 billion gallons of ethanol. In 2007, US farmers grew 13.1 billion bushels of corn, turned 3 billion bushels of it . . . into 8 billion gallons of ethanol,” leaving 10.1 billion bushels for food, more than the 7.9 billion bushels in 2002. Do the math: “despite the nearly three-fold growth of the corn ethanol industry,” Zubrin writes, “the net corn food and feed product of the USA increased 34% since 2002. Furthermore, contrary to claims in many articles, this has not been done at the expense of soy or wheat production. In fact, U.S. soy plantings this year are expected to be up 18% to a near record of 75 million acres, wheat plantings are up 6%, and overall, U.S. farm exports are up 23%.”

*The ethanol program pushed the price of a bushel of corn from $2.50 to about $4.50 or $5 in the last five years, or 9 cents per pound at the $5 price. This has induced farmers to plant more corn, from 78.9 million acres in 2002 to 93.6 million acres in 2007, putting “more corn on the market, helping to feed the world.”

*Those price increases? Blame OPEC, for causing fuel prices to rise 60% this year, plus increased demand from China and India . At $5 per bushel, the corn in a $3 box of cornflakes “cost 8 cents when bought from the farmer. So farm commodity prices have almost no effect on the retail consumers. But the effect of oil price hikes can be huge.”

*With oil above $120 per barrel, the U.S. will pay nearly $1 trillion for its oil supply, and the world as a whole will pay almost $4 trillion. “These petroleum costs are both up a factor of ten from what they were in 1999, and represent a huge highly-regressive tax on the world economy,” argues Zubrin, an astronautical engineer by training. “[The dollars going to OPEC are] “equivalent to a 45% increase in income taxes across the board, with 60% of the sum being paid over in tribute to foreign governments. Indeed, it is this massive tax increase – by far the largest in American history – that is now driving the United States into a recession.”

His conclusion: “rather than shut down the biofuel programs, we need to radically augment them, to the point where we can take down the oil cartel." He wants Congress to require that all new cars "be flex-fuel vehicles that can run on any combination of gasoline, ethanol or methanol. The technology is readily available and it only costs about $100 per vehicle. By making America a flex-fuel vehicle market, we will effectively make flex-fuel the international standard, as all significant foreign car makers would be impelled to convert their lines over as well.”

Zubrin doesn't pretend that corn ethanol will do much to avert the greenhouse crisis, but his focus on oil independence and energy prices is likely to resonate with more Americans (and politicians) than climate change does anyway. (As an aside, I have to mention a letter I got today from an angry reader, letting me know that "nobody [in his small town] even knows what a carbon footprint is. . . . Global warming and saving the planet is a bunch of crap. Everyone is concerned [instead] about maing enough money to pay for gasoline to drive to work.") And that will be the challenge for the next Administration, and the next Congress.







Mimi Ricketts

Director of Communications

National Corn Growers Association

(P) 636-733-9004, ext. 112

(F) 636-733-9005
 
I don't know much about how exactly investing in oil futures works, but to me doesn't this pricing boom seem eerily similar to the housing boom and bust? Housing prices skyrocketed as everyone jumped in head first investing every dime they had trying to make a quick buck. Eventually it topped out and crashed to the ground.

Is the oil market setup for the same type of bust, with massive fallout?
 
Its times like these that make me thankful to be working for a major oil company. The company gas card is the best perk in the biz. They encourage us to use it as often as possible, cause the more free gas we use, the less there is on the market and the more they can charge customers for it at the pump!

Makes me feel kinda bad for people that have to buy their gas, so I try to fill my neighbors tanks whenever I get the chance.
 
I don't know much about how exactly investing in oil futures works, but to me doesn't this pricing boom seem eerily similar to the housing boom and bust? Housing prices skyrocketed as everyone jumped in head first investing every dime they had trying to make a quick buck. Eventually it topped out and crashed to the ground.

Is the oil market setup for the same type of bust, with massive fallout?

Not to mention the technology bust too. Seems like there can be major market manipulations when a large amount of people move there money around. Like a self fulfilling prophecy of sorts, until it bursts.

I wonder what will be next.
 
Would anyone like to bet on the price of corn /ethanol if every car in America had a 1/2 a tank full? what makes you think the greed is isolated to OPEC. Independence is all it would help.The price will not come down as a result.At this point we make a tiny portion of what it take to dramatically reduce our dependence on foreign oil. Biofules are not the answer .I think all efforts should be to find real long term solutions rather than a temporary fix which is all biofuels are at best. How long before that is not good enough for the "green movment" . I cant help but think its a bad idea to invest in soon to be yesterdays technologies that will in all likleyhood be obsolete before ever fully implemented . while Zubrin is a great scientist I wonder how much of the economics that will ultimatly decide the fate of these ideas he really understands.
 
Why is there no little focus cast at the oil speculators? From everything I've read, they are more to blame for this oil spike than OPEC or Big Oil. One estimate was that 1/3 of the current price is overinflation created by speculators. Thats $45 per barrel!!!! These people need to be strung up by their sacks. Makes me sick people would put their own money hungry greed above the well being of an entire nation. Companies like Goldman Sach that send out doom and gloom predictions (that always come true, what a shock) that fuel the rise and then cash in, need to take a dirt nap.

Sure OPEC doesn't object the speculators price manipulation, but it doesn't seem like they are the ones fueling it!
 
^+1... a lot of people are making money by saying "The price of oil is going up!"

And guess what, oil companies see this... .they can control that... now there's $ in two pockets... :(
 
Would anyone like to bet on the price of corn /ethanol if every car in America had a 1/2 a tank full? what makes you think the greed is isolated to OPEC. Independence is all it would help.The price will not come down as a result.At this point we make a tiny portion of what it take to dramatically reduce our dependence on foreign oil. Biofules are not the answer .I think all efforts should be to find real long term solutions rather than a temporary fix which is all biofuels are at best. How long before that is not good enough for the "green movment" . I cant help but think its a bad idea to invest in soon to be yesterdays technologies that will in all likleyhood be obsolete before ever fully implemented . while Zubrin is a great scientist I wonder how much of the economics that will ultimatly decide the fate of these ideas he really understands.

First..........
ehtonal plants are (unlike oil) not owned by just a couple big companies.
They are being built by investers. LOTS OF EM. there are literally dozens of ethanol plants that are or will be online soon. That is a lot of competition to keep the prices in check (unlike oil).

You are correct. It is not the final answer.
however.
We need to do something and it has to be REAL SOON. Like now would be nice.
It isn't going to do much for milage vs cost saving until it drives the cost of oil down. Make no mistake about it, the cost of oil would bottom out if the US make a REAL effort to go E-85.

As for the green movement. Who cares. They are doing their best to keep us on oil and make it as expensive as humanly possible so as to shut down as many people driving as possible. They look at it as a way to force a major change. Too bad they don't understand human nature and the drive of the American people to make things work.

Hydrogen research is underway. However it is 8-15 years from being anywhere near ready to be released to the general public. I know, I work at one of the places researching it.

Another point that Mafesto left off (and thank you for posting that info), was that after the corn has been used for Ethonal it can be fed to cattle since all the nutrients are still there.
 
Another point that Mafesto left off (and thank you for posting that info), was that after the corn has been used for Ethonal it can be fed to cattle since all the nutrients are still there.

Actually, only about 1/3 of the original corn weight is remaining.
 
Premium Features



Back
Top