Archive for April, 2008

Freedom’s Enemies Hate Biofuels

Monday, April 28th, 2008

Venezuelan petrotyrant Hugo Chavez has renewed his denunciations of biofuels. According to an Associated Press story dated April 26, 2008:

“Venezuelan President Hugo Chavez says a U.S. push to boost ethanol production during a world food crisis is a ‘crime.’
The socialist leader says he’s concerned that so much U.S.-produced corn could be used to make biofuel, instead of feeding the world’s poor.
Chavez says the corn needed to fill an average car with ethanol would be enough to feed seven people for a year.”

Actually, since a bushel of corn yields 2.8 gallons of ethanol, the corn needed to fill a 20 gallon SUV tank is 7 bushels, which at the current market price of $5/bushel, costs a total of $35. According to Mr. Chavez, then, the cost of feeding one person for a year is $5. With oil hitting $120/barrel, Mr. Chavez’s government this year will receive about $88 billion in revenues taxed from the rest of the global economy, while the OPEC governments collectively will tax the world to the tune of $1400 billion.

(Omitted from Chavez’s analysis is the fact that the ethanol program has actually stimulated corn production so much that, after the part used for ethanol is taken away, the net US corn harvest available for food and feed is up 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, US farm exports are up 23%. Much more can be produced as demand requires, since of 800 million acres of US farmland, only 280 million are actually being farmed. This is why – $5 per person per year feeding price aside –  the entire Malthusian conceit underlying Chavez’s fuel vs. food argument is nonsense.)

Chavez’s remarks reinforce those made by the Saudi Arabian oil minister in a speech made in Paris April 8, wherein he expressed his deep concern that biofuels could contribute to global warming. Chavez and the Saudi’s negative assessments of biofuels were also strongly supported by arch Malthusian Lester Brown in an op ed in the Washington Post April 22.

The fundamental unity of the Islamist, the petrotyrant, and the Malthusian positions was made clear by pro-OPEC propagandist Robert Bryce, in a debate with me that aired on the Mike Medved Show April 21. (Which can be heard by clicking here.)

When hard pressed, Bryce finally emerged with the following argument: Biofuels are to be shunned because they threaten to lower the price of oil, and thus encourage economic growth, particularly in the third world, and thus global warming.

So apparently we should all be thankful to OPEC, which by taxing the world economy into a recession, is doing so much to curtail uncontrolled human aspirations, while concentrating power in the hands of those who would eliminate all freedom forever. 

Robert Zubrin, author “Energy Victory: Winning the war on Terror by Breaking Free of Oil,”

A reader writes in with an example of how innumerate Chavez’ statement is:

“If the $88 billion/year Venezuelan oil revenue figure is correct (and I have no reason to suspect otherwise), then Hugo Chavez can singlehandedly end global hunger – $88 billion/$5 per person = 17.6 billion people that can be fed on Venezuelan oil revenue alone. What a humanitarian gesture that would be! And as there are only 6.6 billion people on Earth, he can still pocket $55 billion dollars for his own personal needs…”

International Energy Agency (IEA) warns against retreat on biofuels

Monday, April 28th, 2008

The Financial Times report:

Biofuel production is critical to meeting current and future fuel demand in spite of its possible role in driving up food prices, the west’s energy watchdog has warned.[...] the International Energy Agency said that the crop-based fuel was vital to meeting current and future demand.

Biofuels already make up about 50 per cent of the extra fuel coming to the market from sources outside the Opec’s oil cartel this year. This explains why fears of a retreat from biofuels this week helped drive oil prices to record levels.

So it’s very clear why the Defenders of the Status Quo are bashing ethanol and blaming it for food price increases — any decrease in ethanol production will drive an increase in oil price.

William Ramsey, deputy executive director at the IEA, said: “If we didn’t have those barrels, I am not sure where we would be getting those half a million barrels [from],” adding that Opec has said it would not raise supply. [...]

the UN’s Food and Agriculture Organisation says biofuels are not a major cause of the food crisis. The FAO estimates biofuels account for 10 per cent of the food price spike.

Don’t be fooled by the Defenders of the Status Quo

Monday, April 28th, 2008

Oil prices have driven up food costs but the Defenders of the Status Quo are blaming alternative fuels. What’s going on here? Watch Dazed&Confused and get some clarity:

Trouble in Nigeria removes 1 million barrels of oil a day from the global market

Friday, April 25th, 2008

Terrorist attack on a key pipeline plus a workers strike has removed 1 mbd of Nigerian oil – 40% of the country’s usual output – from the market:

Oil production by ExxonMobil Corp.’s local subsidiary Mobil Producing Nigeria Unlimited has been cut by 90% or nearly 780,000 b/d due to the strike by MPN workers, according to George Sola Olumoroti, Mobil branch chairman of the Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan). [...]

Meanwhile, Nigeria’s main militant group—the Movement for the Emancipation of the Niger Delta—said it attacked a crude oil pipeline operated by Royal Dutch Shell PLC in Rivers state, in southern Nigeria, on Apr. 24.

Shell confirmed the Nigerian militants’ claim through community contacts, saying the installation affected is located around Kula in the eastern Niger Delta. Shell was forced to shut in 170,000 b/d of production as a result of the attack.

Following the assault, Shell was forced to declare that it would not be able to meet its contractual obligations for crude deliveries in May from its 400,000 b/d Bonny field.

MEND said it will continue to attack oil installations in the country in its effort to gain a greater share of Nigeria’s revenues from oil, much of which lies in the southern Niger Delta.

More on MEND here.

Would you like 15% higher oil prices?

Friday, April 25th, 2008

Merrill Lynch commodity strategist Francisco Blanch says that oil and gasoline prices would be about 15% higher if biofuel producers weren’t increasing their output. That would put oil at more than $115 a barrel, instead of the current price of around $102. U.S. gasoline prices would have surged to more than $3.70 a gallon, compared with an average of a little more than $3.25 today. Biofuels are playing “a critical role” in satisfying world demand, says Fatih Birol, chief economist of the Paris-based International Energy Agency. Without them, “it would be much more difficult to balance global oil markets,” he said.

Source: Wall Street Journal, March 24, 2008

With oil around $120, the 15% increase in oil price discussed above should the anti-biofuel propaganda prevail and biofuel production be reduced would carry us to $138. Apparently, the anti-biofuel crowd, with Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi taking the lead, wouldn’t mind that outcome.

That’s a new euphemism

Friday, April 25th, 2008

In an overview of why oil prices are high that surveys the supply situation in various oil producing countries, we find this:

Exports of Kirkuk crude from [Iraq]‘s north are stabilizing as the system recovers from technical problems that had mostly idled the pipeline since the U.S.-led invasion of Iraq in March 2003.

emphasis added. Don’t think we’ve heard “technical problems” used as a euphemism for terrorist attacks before.

Lots of euphemisms going around lately:

Federal agencies, including the State Department, the Department of Homeland Security and the National Counter Terrorism Center, are telling their people not to describe Islamic extremists as “jihadists” or “mujahedeen,” according to documents obtained by The Associated Press. Lingo like “Islamo-fascism” is out, too.

Well, the memo apparently didn’t get to the jihadists themselves, who do, indeed, believe that jihad means holy war and in this video promise to “slit the throats of Americans and Jews” (watch.)
Didn’t get to this Islamist cleric either.

Nor to Al-Qaeda Leader Abu Yahya Al-Liby:

Jihad, which is the highest form of dissociation from non-Muslims, should be waged against the Jews, like it should be waged against the Christians, the Zoroastrians, the Hindus, and the apostates. [...]

We fight all the polytheists, just like they fight us all. We do not limit ourselves in this. We do not restrict ourselves to one type [of infidels] or to one region. This [Jihad] will continue until they all submit to the religion of Allah, yield to its laws, and surrender to its rule. [...]

Yes, we believe that the entire world must be ruled by Islam, and no grain of soil should be made an exception, because the Prophet Muhammad was sent to all people without exception. This does not mean, however, that we must fight all peoples of the world at once, in order to subject them to Islamic law. Islam did not command us to do so. Islam commanded us to fight the closest and then the next, from among the people who refuse to submit to the rule of Islam. We should move from the closest to the next, and widen the circle, until all people submit to the rule of Allah. We are now at the beginning of the road, when we try to regain the lands taken over by the infidels, from among the Jews, the Christians, their apostate supporters, and treacherous rulers.

What would our government, in its infinite wisdom, like us to call jihadists? “Banana”?

Something tells me bin Laden is laughing in his cave.

Oil prices driving up your food bill

Thursday, April 24th, 2008

CNN’s Jim Boulden reports on the direct link between oil and food prices. Click to watch.

Food prices track oil prices

Debunking anti-biofuel hysteria

Thursday, April 24th, 2008

Roger Cohen in the New York Times:

The supposed crimes of biofuels are manifold. They’re behind soaring global commodity prices, the destruction of the Amazon rain forest, increased rather than diminished greenhouse gases, food riots in Haiti, Indonesian deforestation and, no doubt, your mother-in-law’s toothache.

Most of this, to borrow a farm image, is hogwash and bilge.

If Asian rice prices are soaring, along with the global prices of wheat and maize, it’s not principally because John Doe in Iowa or Jean Dupont in Picardy has decided to turn yummy corn and beet into un-yummy ethanol feedstock.

Much larger trends are at work. They dwarf the still tiny biofuel industry (roughly a $40 billion annual business, or the equivalent of Exxon Mobil’s $40.6 billion profits in 2007). I refer to the rise of more than one-third of humanity in China and India, the disintegrating dollar and soaring oil prices.

Hundreds of millions of people have moved from poverty into the global economy over the past decade in Asia. They’re eating twice a day, instead of once, and propelling rapid urbanization. Their demand for food staples and once unthinkable luxuries like meat is pushing up prices.

At the same time, the rising price of commodities over the past year has largely tracked the declining parity of the beleaguered dollar. Rice prices have shot up in dollar terms, far less against the euro. Countries like China are offloading depreciating dollar reserves to hoard stores of value like commodities.

Food price increases are also tied to oil being nearly $120 a barrel. Fossil fuels are an important input in everything from fertilizer to diesel for tractors.

Another myth that needs nuking is that the Amazon rain forest is being destroyed to make way for Brazilian sugar-cane ethanol. Almost all viable cane-growing areas lie hundreds of miles from the rain forest. Brazil has enough savannah to multiply its 3.5 million hectares of cane-for-ethanol production by ten without going near the Amazon ecosystem.

Brazilian rain forest is burning, as it long has, for a complex mix of economic reasons. Brazil’s successful ethanol industry — 80 percent of new cars run on ethanol or gasoline and all gasoline comprises 25 percent biofuel — is not one of them.

He calls for removing the 54cent a gallon tariff on ethanol imports.

Get it straight Reps. Blunt and Markey!

Wednesday, April 23rd, 2008

See if you can spot the mistake in the following statements (hint -it’s the same mistake):

Rep. Roy Blunt (R-Mo.), House Republican Whip: “clearing the way for clean alternatives such as nuclear energy to take root [...] would have a downward impact on our [oil] dependence, and a stabilizing effect on price.”

Rep. Ed Markey (D-MA), Chairman of the House Select Committee on Energy Independence and Global Warming: “said alternative sources such as wind, energy and solar were the only long-term solution to get around soaring oil prices.”

Bigger hint:
Electricity generation by energy source

Even bigger hint:

Oil demand by sector

Memo to Reps. Blunt and Markey – we use very little oil to generate electricity, and conversely only a tiny fraction of our electricity is generated from oil. So you may have all sorts of reasons to favor solar, wind, and nuclear power, but please get your facts straight — increasing their use will do nothing to reduce U.S. oil dependence. And please note that the Department of Energy has reported that even today’s grid has sufficient reserve off peak power generation capacity to fuel over 70% of the US vehicle fleet should we have a massive shift to plug-in hybrid vehicles. You may have various reasons to wish to further diversify what electricity is generated from, but let’s keep the facts straight — it’s 98% not oil.

UPDATE: More pols making the same error:

New Jersey Republican candidates] for U.S. Senate used the record price of oil as a backdrop for all that is wrong with the U.S. economy.

During their first debate, the candidates — Dick Zimmer of Hunterdon County, Joseph Pennacchio of Montville and Murray Sabrin of Fort Lee — invoked Ronald Reagan’s free-market philosophy, saying that private enterprise got America through tough times before and it must do the job again, with oil at $119 a barrel.

“When our backs were against the wall, Americans were able to split the atom,” said Joseph Pennacchio, a dentist and state senator. He suggested that the country put the same fervor into nuclear, wind and solar power research.

Dick Zimmer, the former congressman and state legislator, suggested easing some regulations on the nuclear industry and taking other steps to lessen dependence on foreign oil.

[...]Murray Sabrin, a Ramapo College professor, decried what he called “anti-nuclear hysteria.”

“Of course we need nuclear energy,” he said.

Like we said – lots of reasons to support a variety of sources of electricity – but since we essentially no longer generate electricity from oil, reducing oil dependence isn’t one of them.

Have other examples of politicians or columnists making this same mistake? Add them to the comments.

Oil prices driving food prices up

Wednesday, April 23rd, 2008

While the defenders of the status quo, the no-energy-of-any-type, and the blame-America-first crowds propagate the myth that biofuels production (and specifically US ethanol production) is driving up food prices, some people are setting the record straight:

[Capt Dr Samai Jai-in, an alternative fuel specialist with the Royal Thai Navy] said calls to limit biofuel development to help keep food prices low were misplaced.

He said recent price increases for rice and other staple grains were due to speculation by commodities traders as well as higher costs for key farm inputs such as fertiliser and pesticides.

Global oil prices have risen by 742 percent over the past decade, compared with 161 percent for cassava, 117 percent for rice, 158 percent for palm oil and 115 percent for sugar…

Capt Samai said it was wrong…to blame rising food prices on alternative fuel production.

In Thailand, he noted that ethanol was primarily generated from byproducts of palm oil, cassava and molasses. “The UN should consider the root cause. Crude oil prices are the main problem, as it hurts all sectors,” he said.

“Given that fact, the UN should be calling on oil-producing countries to help curb food prices by cutting oil prices. But cutting biofuel development is totally the wrong idea. … Wealthy oil producers, who have already benefited significantly from high oil prices, should allocate some of their money to help poor countries, such as Africa.”