Archive for April, 2008

700 Club: How oil funds terror

Wednesday, April 23rd, 2008

Watch Set America Free members Jim Woolsey and Robert Zubrin:

China’s race to alternative fuels

Monday, April 21st, 2008

Last Thursday, Set America Free held an educational briefing in the House of Representatives on China’s very rapid progress on alternative fuels and advanced vehicle technology.

Greg Dolan of the Methanol Institute spoke about China’s progress on massive expansion of production and use of the alcohol fuel methanol

Dr. Paul Werbos of the NSF spoke about China, Japan, and Korea’s advances in battery technology and plug ins.

The bottom line: the Chinese are moving much more rapidly than the U.S. Alternative fuels and advanced vehicles are a top priority for the Chinese government.

Batteries for plug in hybrids are cheaper in China by factors of two, three, and more than comparable batteries in the U.S., and Chinese firms are expecting to have plug in hybrids ready for the mass market this year and next.

The Saudis hate alcohol

Friday, April 11th, 2008

It’s official. Right from the top. The kingdom of Saudi Arabia hates biofuels. Out of concern for the environment and world energy security, of course. At the International Oil Summit in Paris Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi promised that fossil fuels will supply the bulk of global energy needs for at least the next 50 years. He said that “ethanol and other biofuels do not meet environmental and energy security goals” and that “their cultivation eats into the human food supply, reduces the absorption of carbon dioxide as forests are cut down, has not improved the security of energy supply and has not reduced petrol prices.” Biofuels also enjoy “financial favouritism” from governments, according to the minister.
“we have to look beyond biofuels… and concentrate instead on truly renewable sources of energy,” he said, flagging solar energy as “perhaps the best source” of alternative energy, predicting researchers will succeed in making solar cells “more effective” to expand use. What the Saudis omit is that we no longer produce electricity from oil so solar power is no threat. This cannot be said about alcohols which directly displace oil and snatch petrodollars from the Saudi coffers.

Merrill Lynch analyst Francisco Blanch just told the WSJ that without biofuels, the price of oil would be about 15% higher than it now is. This means at least $13 higher. This year the US will import 5 billion barrels. At $13 saving for each barrel, that adds up to a saving to the country as a whole of $65 billion in foriegn oil payments due to current biofuel programs.
That shows that our biofuels program has cost the Saudis billions. No wonder they are opposed to it. It just needs to be taken further.

“Food vs Fuel” Argument is False

Wednesday, April 9th, 2008

Here is some interesting data that shows that the food vs fuel argument is false.

2015 (Projected)
Harvested corn
acres & yield
(129.3 bu/A)
(149.1 bu/A)
(151.1 bu/A)
(180 bu/A)
Total Corn Supply
(prod = carry in)
10,573 Mbu
12,512 Mbu
14,393 Mbu
17,232 Mbu
Ethanol per Acre
350 gal/A
404 gal/A
435 gal/A
575 gal/A
Ethanol produced
2.96B gal
5.8B gal
8.3B gal
15.3B gal
Corn used for
1,093 M bu
2129 M bu
3010 M bu
4,695 M bu
Corn Supply
(Less Used for Ethanol)
DDG Disp (M bu eq)
9,669 M bu
10,898 M bu
12,175 M bu
13,989 M bu


Note the bottom line. AFTER corn crop removal for ethanol production the US produced a net of 9.7 million bushels in 2002, 10.4 million bushels in 2006, and 12.2 million bushels in 2007. 

Thus despite the growth of the corn ethanol industry (or actually because of it, as I’ll explain below) the net corn food product of the USA increased 17% between 2006 and 2007, and 26% since 2002. Overall, US farm exports are up 23%.

The reason why this is so is because agriculture is not a zero sum game. Only about 30% of US arable land is actually being farmed (it’s more like 15% in the third world). As a result of the ethanol program, the price received by farmers increased over the past year from $3.50/bushel to $5 per bushel. (There are 56 pounds of corn in a bushel – that’s actual grain, not corn on the cob. So $5/bu corn is $0.09/lb). By increasing the price the farmer gets from $0.07/lb to $0.09/lb, the program caused a great increase in the amount grown, both by increasing acreage and intensity of effort, and thus yield. This puts more corn on the market, and actually acts as a factor to decrease the price that grain merchants can charge for the corn, since they need to sell it all. (Adam Smith discusses this very issue in The Wealth of Nations.)

However, the retail price of corn, as well as all other food commodities, is being driven up an average of 4% by increased fuel prices, which are up 40% this year, as well as increased demand from China and India. The increased fuel prices affect retail food prices by increasing the price of production (of both agricultural products and especially fisheries), transport, wages, and packaging, which are the majority of cost of retail food. (At $5/bu, a $2.50 box of cornflakes, which contains 15 oz or corn, contains corn that cost 8 cents when bought from the farmer.

Robert Zubrin
author “Energy Victory