A Vicious Circle

A few days ago, someone here posted a link to a story about skyrocketing farmland prices in the Midwest. It really made me angry to think about the inflationary chain reaction and the vicious chain of events our politicians have set into motion with these ethanol mandates. It made me even angrier to think that the few who benefit from these policies defend their right to siphon money from the rest of us and into their pockets. (I will be the first to say that surging energy prices are a big component of surging inflation, but with the ethanol mandates we are throwing jet fuel on an already raging fire).

This all started out innocently enough. Oil prices were climbing. Our energy production was shifting to an ever greater extent to countries that are hostile to the U.S.

So, Step 1 in the chain is to propose a solution:

1. The government should subsidize ethanol production to encourage production of home-grown fuels, which will enhance energy security and create jobs in the Midwest.

However, subsidies didn’t work as expected. It was still too expensive to produce ethanol. People continued to choose gasoline over more expensive ethanol. We had to move to Step 2.

2. The government should mandate ethanol usage.

When the mandate was added to the equation, things change. Now, the fuel doesn’t have to be economically priced. It is going into the fuel supply regardless of the price. This mandate generates an immediate market for ethanol, and kicks off a massive expansion of ethanol capacity.

But it isn’t long before we notice that too many people are building ethanol plants. This is causing a glut of ethanol, and putting downward pressure on the price of ethanol. On the other side, it is raising the price of corn. This lowers the margins for ethanol producers, and some producers start to go bankrupt. Projects are delayed or cancelled. The solution? Proceed to Step 3, which is entirely predictable:

3. We need to increase the mandate for ethanol usage.

Unfortunately this leads to more of the problems that arose from the original mandate. Corn prices go even higher. Land prices continue to climb. Land is shifted to corn production, forcing commodity prices up in other areas. Very few segments of the population are experiencing true benefits. The arms race continues, and we find ethanol producers will once again call for higher mandates. It is an entirely predictable consequence of the current policies we have in place.

Who Benefits

The primary beneficiaries are commercial corn (and other commodity) farmers who purchased their land prior to the mandates. They are truly experiencing a windfall from these policies, and thus will fight the hardest to continue down this ill-advised road. A lot of millionaires have been made in Iowa as farmland prices quadrupled.

Secondary beneficiaries are lobbyists who defend the practice, those who are willing to write papers (commissioned by the National Corn Growers Association) that shift the blame, and pandering politicians with constituents that benefit from the current policies.

Who Doesn't

The ethanol producer isn’t even consistently benefiting (unless they are also corn farmers). Ethanol producers are starting to realize that the energy business is often low margin (and cyclical), and not as lucrative as they once thought. When an overbuilding cycle occurs, prices crash. When prices crash, the call for more mandates is raised by ethanol producers who are facing financial trouble. Wash, rinse, repeat. After all, we must bail those out who make poor financial decisions. This is national security, for God's sake! If we don't bail them out with more mandates, the terrorists win. More mandates are certainly needed to rectify this.

The cattle rancher (like my Dad) and pig and poultry farmers get hurt from higher feed prices that cut into already razor-thin (or negative) margins. For our corn farming friends who love to defend these mandates, I would really appreciate it if you would explain to me why it’s OK for you to pull money out of my Dad’s pocket and put it into yours. I know your argument is that you deserve to make a good living. Well, so does he (don't we all!), but your profits are at his expense. But hey, you are getting yours, so you will defend the practice. Just don't expect me to keep quiet about the impacts.

The person trying to buy farmland is hurt by land prices that have exploded as a result of the mandates (unless they inherit family land).

The environment suffers as the mandated corn production means more herbicide, pesticide, and fertilizer usage, some of which ends up in our waterways.

The person who eats is hurt because higher commodity prices ripple through their food budgets, already stretched because of increasing energy costs.

Money for Everyone - and It's Good for the Environment

So what's the solution to this mess that has been made? I think it is simple, really. We all need to become either corn lobbyists or corn farmers. That way we all profit and we can afford to pay the financial consequences of spiralling inflation resulting from these mandates. (I suppose we will need to be subsidized for our farm purchase, since farms have gotten pretty expensive).

Now some may suggest that this would negatively impact the environment. I have a solution for this. We can simply commission a study to show that there is in fact no negative impact on the environment. Problem solved. I suppose I also need to commission a study that shows that aquifers are actually depleting because people are drinking a lot more water than they used to.

For those who support the mandates, why don't we create more wealth by mandating that everyone buy a new computer or a new Ford every 3 or 4 years? Wouldn't that create jobs? Heck, maybe we can make everyone wealthy and create jobs for all with more mandates. Unless of course, there is a downside to these mandates that I am missing….

RR - I am visiting friends in Western WI right now, who have farming families. They tell me land around here is renting for $250 an acre and is $300 an acre not too far west or south from here. Hay to feed animals is a problem, and some people I talked with are selling off animals because it costs too much to feed them (I would assume these impacts would eventually result in higher meat prices as well). As energy prices increase due to peak oil, rents on non-energy inputs will also increase as we will draw from the periphery to keep the status quo going. I would hate to be a corn or cattle farmer who didn't own the land - diesel, farm inputs and land rent going up mighty fast.

Robert and Nate

The complaint about policy that twists innovation and land values is valid.

Here is an option to find sustainable options.

Problem: Mobilizing for World War I infrastructures of power generation, communications and transportation were monopolizing to control threats.

De-monopolization of communications in 1984 broke this pattern. In 1984 we still had substantial numbers or rotary telephones. Now nearly every teenager walks around with a "shoe-phone" whose integrated computer would have cost more than $134,000 in 1984.

Monopolization has continued in power generation, inefficiency of 69%.

Monopolization has continued in transportation, inefficiency of 80%. CSX Railroad currently runs an ad showing how they move a ton 423 miles on a gallon of fuel. Ships and railroads are radically more efficient than cars. In congested urban transport, about 4 billion of the 8 billion miles Americans drive daily, efficiency is about 4%; the other 96% goes to drive climate change.

We do not have an energy problem, we have a regulatory problem. De-monopolize power generation (i.e. Germany's Feed-in Tariffs) and transportation (such as Personal Rapid Transit) and we can increase efficiency to live within a solar budget.

But even here at TOD discussion of Personal Rapid Transit is censored. If we want more creative answers we have to tolerate the flakes and innovators.


I object to your assertion that PRT is censored on TOD. I don't know too much about it other than the closed loop systems around airports and the like. Perhaps you could do a post on PRT to get the discussion going.

I can understand why censorship is objectionable. It seems silly to me to excluded ideas. Ask Leanan why my posts on PRT keep getting censored. Currently urban transport is about 4% efficient. PRT can increase efficiency to about 70%.

I would post more about PRT but the post keep getting cut. Ask for an open discussion on this subject.



PRT is not a panacea. It has a niche benefits. But in that niche it can provide efficiency improvement from 4% to 70%. How big that niche will become will be clear over time.

Our approach is pretty simple, it costs less to move less. In highly repetitive travel, why are we moving a ton to move a person? Every stop start requires applying power to re-build kinetic energy.

I amended this Livermore Labs graphic to illustrate the vast percent of waste in power generation and transportation.

The "Potential Profit" is dumpster diving, the harvesting of waste into profit. It is hard work. It requires many niche solutions.

If we allow innovative solutions to attack waste, we will not have an energy problem. My education is in nuke engineering. I have no trouble with nukes, but distributed generation from solar is likely our best long term option.

If we use power where it is generated, you can substantially decrease transmission loses in power generation. Transmission loses are about 30%. That is what Germany's Feed-In Tariffs are accomplishing.

If we appropriately apply PRT, we can achieve rail efficiencies in urban transport. In our effort, we integrate distributed power generation to power a distributed need for power in transportation.

"Censored" is a far different animal than "dismissed by commentators". Every PRT system I"ve been introduced to was either wildly optimistic, didn't solve any problems better than competing transit solutions, was far too expensive, or some combination thereof. I've seen quite a few, and almost all were introduced on this site.

We've got trillions of present-day dollars and millions of miles of right of way in our current road system - that's the biggest block to PRT right at the beginning - we already built an all-encompassing system, our of asphalt.

We do not have an energy problem, we have a regulatory problem.

OH really?

Here *I* was thinking all this time 'we' had was a economic model based on growth, underpriced cheap energy, and strong arguments that the world is suffering from overpopulation.

If it is simply "too much government" - hows that 'less government' thing working out in the US of A? Ya know - under the rule of the party who says they are gonna shrink the government.

But let me get to why I opted to login and respond:

Now say - how does your PRIVATE transport system exist without the governments power to confincate land for public use?
(Odds are this query will go unanswered, the same way how pointing out bicycles 'weight less and therefore are an even BETTER deal' or how 'why move people when their daily personal transport options can be moved via worker dorms or telecommuting')

But even here at TOD discussion of Personal Rapid Transit is censored.

If that is the way *YOU* see it, that is your problem. *I* see it as some guy who wants to pimp his own idea that would line his own pocket with money who is being told 'no , this is not a vector for you to line his pocket'

You want to make a profit on your idea? Fine. But why are you so bent outta shape when you can not use a resource you are not paying for to spread your for-profit message?

Regulatory monopolies in power generation and transportation are terribly inefficient. Innovation is barred by regulations.

The biofuels effort is an attempt by current transportation regulators to find a way to sustain the car/road network. If we challenged our fundamental assumptions, we can invent better for some niches.

In the niche I understand (congested, repetitive transport), efficiency can be increased from 4% to 70%. If we do that, we can live within domestic US oil production. We can live within a solar budget.

"Waste not, want not."

Innovation is barred by regulations.


Show how this is the case.

Sorry to say, I cannot quote the facts here.

bill, here is what i think of what you thought

1. Germany Energy is primarily a monopoly. Please read about a firm called EON. The government mandated the changes you are on about.
2. In the united states de monopolisation has led to price rises in the energy sector. As it has in UK too.
3. Monopolization has continued in transportation, inefficiency of 80% -> you need to read the history of californian trams/electric buses, note period after WWII when GM et al bought them up and slowly closed them down. A similar story happened with UK canals when railways came along. Lack of regulation, lack of checks and balances on democratic processes that allowed companies to make these monopolies. Thus never need to change their ways.
4. I praise the break up of AT&T, but what happened since, Bell south has managed to remake AT&T nearly. Microsoft has taken the IT market, though the EU are trying to stop that. In the US they legeslated to help Microsoft, upshot is that your software patent laws are a nightmare for small and middle sized businesses, they can barely compete. I admire the states for break up of monopolies like standard oil and AT&T, but they are one off examples.

My thoughts are while you could have non monopolies running these utilities, they are utilities in the end, and have become just too important to allow free market reign. in our democracies the is inherent bias to well funded lobby groups as the people who could regulate often need to make quick decisions that they may not have time to answer well. In these situations, these poeple, if fed something convincing from 'friends' without other opinions fall for the lobby group opinion.

You can guess I am european, I think the is a need for a shake up in how Anglo saxon countries view regulation. We need more transperancy and ability to lock up politicians who are corrupt, or indeed so stupid they fall for lobby group gambits. We need much stronger corridors for lobby from populace.
de-monopolization does not seem to work.


"In the united states de monopolisation has led to price rises"

No, liberalization without sufficient demonopolisation led to price rises. There must be sufficient competition for liberalisation to be effective.

In California deregulation allow customers to choose who would bill them for power.

De-monopolization, allows anyone to sell power to the grid. This allows small business to find profitable niches.

There is a huge difference.

And yet, the people who make claims like yours do not:

1) Set up court watchers.
2) Complain when it is illegal to set up doctor rating systems.
3) Complain when Creekside Beef is treated the way it was.
(there are more, but these are just a simple sample)

But here is the money shot:
"must be sufficient competition"

So, you gonna support the government breaking up GE/WalMart/Boeing/Lockeed-Martin/(blah blah blah)?

How about breaking up AT&T

Strange tie-in but in general, I think there are anti-trust laws for good reason.

If you want innovation, let people bet their own money.

That is the whole problem with ethanol. It is growing because of subsidies, not market demand.

If you want innovation, let people bet their own money.

Then why complain about when people who are using there own money (to set up this place) opt to choose where the discussion goes?

Hi Alex

Monopolies in political terms are dictatorships, monarchs, etc... Monopolies in commerce are not much better at allowing new ideas.

they are utilities in the end, and have become just too important to allow free market reign.

The simple truth is that our current infrastructure is the cause of Peak Oil and Climate Change. We built it. We can build better.

At the time of Edison, Ford and Bell, regulatory monopolies were very weak. As the monopolies grew, we locked in inefficiencies from a century ago. Since de-monopolization of communication in 1984, communication's infrastructure has radically improved. If we want to re-tool transport and power generation, we need to allow the messy process of churn to sort breakdown from breakthrough.

If you want to adapt, you must allow churn. You cannot expect monopolies to risk their existence by allowing themselves to be superseded by better ideas.

You cannot expect monopolies to risk their existence by allowing themselves to be superseded by better ideas.

I still am looking for your whitepaper on the use of Eminent Domain to take from one party to give to another in the name of public good - and how often the new owner results in private gains.

Because the monopolies you list all had the use of Eminent Domain to set them up, and the regulation was the bargin THEY entered into to have the takings of property via Eminent Domain.

The FCC had the incredible foresight to note that networks provided for the general welfare and common defense, a Constitutional basis for granting rights of way for communications networks.

Rights of way need to be paid for, but where would we be without roads, railroads, sewers, power grids, etc....

PRT being off ground plane, will have a visual impact but consumes very little actual land. It should still pay for those uses.

You're using the FCC as a good example of providing for general welfare and common defense? That's a little problematic, seems to me. I'd use the FCC - and document my argument - to prove the failure of the regulatory state and system.

If you want people to take you seriously, do your homework. Upthread someone suggested you put together a White Paper.

cfm in Gray, ME

Rights of way need to be paid for, but where would we be without roads, railroads, sewers, power grids, etc....

But that is not the system that exists.

Land and right of ways are not treated at market rates or market terms.

PRT being off ground plane, will have a visual impact but consumes very little actual land. It should still pay for those uses.

And yet, while you say 'should', you'll be happy to on the profit end of a eminent domain taking.

Robert you are 100% right.

Food to fuel just plain evil.

Not to worry my new SUV gets 10 starving kids to the mile.

Bio fuels are a bad joke... Anyone advocating for them should have all fosil fuels taken away so they can prove energy out is greater than energy in for bio....

As a farmer I think all subsidies should be removed let the chips fall where they may without intervention....

I fully agree that ethanol is a piece of crap. But wait until the government bails out the financial greedsters by shifting the debt from the private to public sector. That's going to make ethanol look like a non-event.


I couldn't agree more. I had wondered how it would get monetized. Add bad bank loans, etc.
The fed cannot just "print money" and give it away via helicopter Ben. It must show up on the bookkeeping/accounting ledger somewhere. It is now very very clear, bank "non performing assets" & the ethanol boondoggle will get shifted to public sector via some bailout program with alot of voter appealing lipstick.
Maybe I'm too young to realize that the sleaze has always been there at this level, this just looks like a scale or two higher or more blatant than what I remember.

Check out Northern Rock in the UK for insight into how it works - that is a crashed sub-prime home loan institution, still trading but taken over by the Government- the cost of this is around the same as the total Fed expansion in a much smaller economy, around £100bn.

It is still being held off budget in spite of the protestations of the independent statistical office and amounts to around 5% of Britain's GDP.

The next shoe to drop in the world financial system will be Britain, which has far worse fundamentals than the US:

British house prices and consumer debt levels are much higher relative to incomes — and have grown faster — than in other leading economies, including the US. Since these levels have now proved unsustainable in America, it seems very likely, therefore, that Britain in the year ahead will suffer a housing and credit correction at least as severe as the one now happening in the US.


On the brightside, when that unwinds into currency rates, US travellers may be able to afford to go somewhere at a reasonable exchange rate after all! :-(

"the cost of this is around the same as the total Fed expansion in a much smaller economy, around £100bn."

This cost is only £100bn if you assume the underlying assets, the houses, are worth £0. House prices may fall, but they are unlikely to actually fall to zero. In reality the actual exposure the taxpayer is much smaller than this quoted figure. In may not be great times for sellers in the UK housing market, but a fall of much more than 10% is probably unlikely.

You are correct, I overstated my case.

Had they subsidised Virgin to take over the business, then the cost would likely have been of the order you mention or even less.

Instead they have decided to nationalise it and carry on trading, as the £5-10 billion would have shown clearly on their books.

Having had considerable experience with nationalised companies over the years they have pretty well all ended up as valueless assets, although the drama might take a while to play out.

Further plays with dodgy assets would not at all surprise me, rather as a gambler tries to recover his losses.

There are likely other lenders who will need bailing also, so I don't think overall I am being too generous in allowing £100bn, but of course you are right at the present time.

RR -- thanks for the provocative post. Here in Minneapolis, MN, many people still think that there is just no downside to ethanol.

I was at the Mpls-St. Paul Auto show repping Zap MN, which sells the electric Zap Xebra.

The show was full of huge SUVs, vans, and pickup trucks with all manner of shine and sparkle.

There were all kinds of cars, but most were not fuel efficient at all.

The vehicles that weigh three tons or more no longer have to show an estimated city mileage or highway mileage -- they just put a big "XX" where the numbers should go.

GM had their big Yellow signs for their big push for ethanol fueled vehicles.

Why are we still building and selling a huge oversupply of vehicles that guzzle liquid fuels?

A person can buy, insure, and drive a Zap Xebra for the amount of money many people pend on gas for one vehicle. Yes, the Zap is limited to 40 mph and a 40 mile range on a 60-cent charge, but most of our urban trips are under 10 or 12 miles.

The ethanol boom is another terrible policy courtesy of Corporatist culture. Corporatism is fixated on fusing government and business leadership, centralizing wealth and militarism. Ethanol fits in just fine with that.

We need to reduce population and consumption. We need to educate ourselves about how to survive in an increasingly hostile, volatile climate. We need to learn to replace war with diplomacy.

We are investing all we can to out consume every other nation, to deny the possibility that this planet can limit our appetites in any way, and we are investing as much as possible in war. Ethanol fits in fine with that as well.

Everyday folks are cultivated to be willfully ignorant and resistant to change, submissive to authority, and conformist in thought and deed.

No where is this more apparent than at an auto show. Those who suck up to the Corporatist leadership get to have jobs.

When things get painful here in the USA for enough people, then the Useless Eaters will be imprisoned or killed, as will be dissidents or nonconformists or those who defy authority in any way.

RR - we love ethanol. How could it possibly be otherwise?

A person can buy, insure, and drive a Zap Xebra for the amount of money many people pend on gas for one vehicle. Yes, the Zap is limited to 40 mph and a 40 mile range on a 60-cent charge, but most of our urban trips are under 10 or 12 miles.

I am sorry, but something like a zap is a joke. Lets see, I could buy that, pay about $.50/day for electricity and have something that would absolutely useless for anything except my commute to work (assuming that I was willing to risk my life and actually get on a road in that thing). Or I can take the cost of the zap and buy a monthly pass on our trolley system for the next 12 years.

I will take the Alan approach and stick to my electric train.

The Zap Xebra I drive each day is quite useful.

I do handyperson work and house cleaning in an urban area. I think my furthest client is about 6 miles from my home.

I can carry my tools and supplies in the Xebra and get my work done for the cost it would take me to put gas in the tank of most vehicles.

I think that electric trains are the best for commuting without tools and such.

In Minneapolis, many people bike to work -- year-round, in spite of the cold winters. I did this, but the load-hauling aspect caused me to re-think the biking. Carrying a few hundred pounds of tools can be tough on the hips and knees, when done daily.

We are headed for a kind of ecological crash that requires us all to take more immediate risks for the benefit of everyone, in my view.

We are at war, but not with the evil-doers outside of ourselves. We are in a struggle to make it through the Bottleneck of the next thirty years or so with as many species intact as possible. So we might need to take some personal risks -- at least some of us.

My guess is that our species is toast, but I'm willing to assume some risks if there may be a worthwhile payoff. The Zap is a classified as a motorcycle. That's not a huge risk, in my view. And the payoff may be that I do less damage because of my choice to drive a Zap for some urban trips.

Driving most ICE vehicles is a risk I'd rather avoid. My family does own a Honda Civic Hybrid as well. I look forward to the day when we could go with just the Zap and bikes, walking, public transport.

One day, we may not even need the Zap. Just rely on walking and biking and public transport again.

Thanks for the detailed witness. While I feel that Alan is right Overall about Electric Trains (and Bikes) over EV's, I think it's a matter of emphasis, not an 'Either Or'..

As many times as we say we'll be pursuing lots of little BB's to try to get through this, any time you give a shout out for a good BB, you get pelted with stones because 'That one thing can't solve the WHOLE problem, and would be disastrous if they tried.'


Well, big surprise, as we're in a time of extremes, so anything Moderate is going to be rallied against as Traitorous to both ends of the Spectrum..

Keep it up!


This used to be called appropriate technology. Select the technology appropriate to the task at hand which gets the job done, taking into consideration the economic, energetic, and environmental costs of that technology. My ultimate dream would be car free cities everywhere, but we still need to make provisions for the transport of things like tools, heavy equipment, and other heavy and bulky items.

I saw a picture of a solar installer in Boulder, Colorado hauling solar panels to a job site with a bicycle pulling a trailer. It was part of the company's effort to minimize the carbon footprint costs of its installation. This was a local delivery and made perfect sense, especially given the company's mission.

Life, without risk, tends to be not terribly adventurous or rewarding.

I think you should consider changing your moniker from beggar to something like "saint".

We need to bury the "one size fits all" mentality, before it buries us. What is needed is a mix of transport options. For a quick trip from the periphery to downtown, or across town, or from one end of downtown to another, mass transit in one form or another is the way to go. For shopping and other chores around one's neighborhood, NEVs are just the thing if the weather is too bad or the distance is too far or the traveler is too infirm to walk or ride a bike. Interurban trips need to be by electrified passenger rail - high speed if possible, but any speed would be better than none at all. If you need to go someplace off the beaten path not served by rail, then one could get there by ICE automobile (maybe rented); that would also be the option if one needed to haul some stuff. Cross-continental and inter-continental trips will probably still be by air.

IF we had European-quality urban and interurban rail service, and IF we had a network of car rental agencies distributed across neighborhoods rather than just clustered at airports, THEN most people probably COULD get by with just an NEV, most of the time.

Absolutely true. It will be a combination of options that will be viable - some at the personal level, some at the local level, and some at the regional and national level. The marriage of them all together is what will make a viable transportation system. Remove any of them, and the others are less useful.

re "zap is a joke" - I wonder at the hostility. Seems to confirm beggars point about our national mindset and reminds me of Cheney's "Our way life is not negotiable". I don't believe the poster intended it that way but there it is.
Many people have many different needs and short range transportation is not a joke. My typical car trips are all involving children and all less that 10 miles round trip 5 to 10 times a week. The idea of the bus or trolley or any other kind of mass transit meeting those needs is very un-realistic. I am able to substitute an electric/human hybrid tandem bike for many of these trips. It is not a joke. I also accept completely the assertion from enviro attny that electric train is best for him.

Thanks to all for encouraging remarks!

The Neighborhood Electric Vehicle is one of the best solutions we have available, IMHO.

We do need to learn to have a beginner's mind and to see our own consumption patterns in new ways. Then we need to modify our lives so as to reduce consumption as best we can.

Public transportation -- electric rail -- seems to me to be one of the best solutions out there for reducing energy waste in urban areas. Rail transport in general seems like an obvious strategy for us to invest in as much as possible.

I agree that we need many solutions, not a one-size-fits-all approach.

The way we see ourselves is crucial. I chose the user name "Beggar" because I see us all as beggars trying to find out where food and shelter and good companionship is available. This goes for rich and poor alike.

We all have to decide how to spend our time between now and whenever we die. I see us as very transient, comical and tragic creatures.

Ethanol is another one of those strange responses to a problem that make me laugh and cry.

Running out of liquid fuel? Poisoning the planet's air and water and soil?

Our ethanol "solution" is to make more and different liquid fuels -- to do more of what we were doing that got us into a fix in the first place. Where is Charlie Chaplain when you need him?

beggar, "We need to reduce population and consumption."

Consumption reduction is difficult, but how exactly do we reduce population? Fact is it's impossible. Think about it, there is no way to accomplish that. It may seem like a good idea on the surface, but it simply can't be done. The Christians run America, and they believe in having huge families and anyone disagreeing with that notion would immediately lose their political position or be character assasinated. Even in China with their one child law, it didn't work because the wealthy and party members are allowed to have more than one child, often having several. During the one child rule China's population has risen from 900 million to 1.3 billion and still rising. There's even word they have given up on the idea.

Humans, although we have in some ways distanced ourselves from the wild kingdom, are still motivated by the urge to procreate. The one constant is population increases worldwide of about 90 million a year. About one new Mexico a year.

Rising wealth and education level for women lowers the birth rate.

Illiterate impoverished women have lots of babies; PhDs with a good-paying job have none or at most one.

China's one-child policy does not apply to ethnic minorities or people in rural areas. Where are China's educated well-off women? Not among their ethnic minorities or in their rural areas. So their policy applies only to the women who weren't going to have any or many babies anyway, and does not apply to those most inclined to have lots of children.

If you want your country to have less population growth, support measures which give wealth and education to women.

Consumption's easy to reduce. You just have to be an adult, instead of an infant forever consuming, suckling with its eyes closed. A One-tonne CO2 lifestyle is not that difficult to achieve for most Westerners.

Yeah, yeah, I know: "but I can't because..."

but how exactly do we reduce population?

The classic ways are war, starvation via food control, perhaps some diease (like via infected blankets)

From where I sit, the classics are almost all in play. Just need the bio-plague.

There are a couple more, Eric.

Education and Political empowerment of women, and birth-control, which educated and empowered women tend to use.

Don't limit your thinking to all the negatives, eh? We've got enough of that all around us.


Don't limit your thinking to all the negatives, eh?

Dead bodies are quicker to count than smarter, empowered women.

People today don't realize how cheap grain prices are.

If you took the average price of wheat from 1904-1970, for example -- the 66-year average -- and adjusted it for inflation, it would be about $56 a bushel.

That's why small farms could make a living in those days.

Ethanol was always a sort of welfare program to compensate for the collapse of grain prices after 1970.

All you "we need small farm" types better get used to MUCH higher food prices. Like 5x higher. That's how it always used to be.

Eventually the meat producers will compensate with much higher meat prices. If any product is in demand (like meat), it will eventually be produced at a profit.

For those who didn't know (like me!) that compares to a current price of $9-10/bushel.

Econguy, any idea how much we would have to pay for food under this scenario?

At $56/bushel, would that mean 5 times dearer food, or is that too naive and larger farms and other crops than wheat would hold the average down?

What was the average spend on food as a proportion of income in 1970 as against today?


There are 60 pounds in a bushel of wheat. So, at $54/bushel, you'd have to pay about $0.90 a pound. How many pounds of wheat do you eat in a day? Even with a very wheat-intensive diet (lots of bread and pasta), you might manage to eat one pound of wheat a day.

This is like Matt Simmons' "$0.15 a cup". $0.90 a pound is not a high price. Anyone can pay it.

The consumer price, after some transport and processing, marketing, packaging, retailing, etc., would be higher. But, this is not the cost of wheat, it is the cost of transport and processing, etc.

Corn, soybeans etc. are similarly cheap. They would have to go up about 5x more to get back to their 1904-1970 averages.

"$0.90 a pound is not a high price. Anyone can pay it."

According to the United Nations Statistics Division's 'UN Millennium Development Goals Report 2007," in 2006 more than a billion people in the world lived on less than $1 a day income. I suspect most of them cannot pay $0.90 a pound for unground whole wheat (a price only available to processors who buy in very large quantities).

Billions more get by on $5 a day or less. They are unlikely to find $0.90 a pound wheat affordable either.

Of course, once they are out of the picture wheat prices should come down for everyone else.

Should have been "a price that would only be available to processors who buy in very large quantities" since $0.90 a pound would be the future price in this scenario.

People don't "live on $1 a day income." They have a subsistence (nonmonetary) economy, instead of a market economy.

Often, these people who "live on $1 a day income" benefit from higher food prices, because they are often food sellers, not food buyers. Their income becomes $2 a day!

You are right. I wrongly used the term "income" when I should have used "consumption."

In fact, the actual rate and terminology is $1.08 per day in Purchasing Power Parity exchange rates for consumption, according to the World Bank and based on "How Did The World's Poorest Fare In The 1990's," by Chen and Ravallion, also known as Policy Research Working Paper 2409 (WPS 2409). The World Bank research was used by the United Nations report I cited.

The PPP exchange rates for consumption take into account the farmers' and other food producers' consumption of some of their own output and consumption that occurs based on barter, trade, gifts, humanitarian relief and other non-monetary income.

FWIW, 2.1 billion people are estimated to live on $2.15 a day or less, again using PPP exhange rate consumption.

Further, less than half of the 1 billion who live on $1 a day (the UN and World Bank definition of "extreme poverty") are in housholds where farming, herding, fishing or other food-producing occupations provide over 50% of their livelihood.

I doubt that food-producing families living on $1.08 per person per day sell enough food that their standard of living will improve much if food prices go up. As for the majority of that 1 billion, their prospects would undoubtedly be even bleaker.

Not everybody in this world has a 9-5 job. I've traveled among the hill people of northern Thailand (who are really refugees from the lower Himalayas), for example. Their monetary transactions may average $1 a day, but their livelihood (in this case) came from dry field rice agriculture, and of course other such subsistence (nonmonetary) activities.

You can put any sort of number on it you want, but the point is that they are mostly detached from the monetary economy, rather like some people around here say we should do.

The economy could collapse, or wheat prices could go to $1,000 a bushel, and they wouldn't notice. They don't read newspapers, and they live many miles from any roads, televisions, phones, electricity, etc. Occasionally they might come out to work a few days to buy some metal tools or something.

This is the way most everybody lived, not very long ago.

I was also in Vietnam in the mid-1990s, which, at the time, was one of those places where people supposedly "lived on $1 a day" in the rural areas. They grew rice, chicken and pigs, fished, and were basically happy and healthy in a traditional Vietnamese sort of way, interacting with the monetary economy only rarely.

One problem, in some areas (particularly Africa) that might otherwise have a traditional nonmonetary subsistence economy, is the availability of very cheap foodstuffs from places like the US. Whether due to low market prices, or outright gifts or other "aid," food is available nearly for free. This makes it uneconomical to farm, so these traditional farming communities have disintegrated. That could indeed be a problem if the availability of free or near-free food ceases, as there may have to be an adjustment period. The availability of free clothing has had a similar effect. When your food and clothing is free, then, by definition, your "consumption" at market prices is also zero, is it not?

The same goes for your statistics, which are highly suspect in any case. If a subsistence agriculture family grows and consumes two pounds of grain per day (on average), which is plenty for them, and that grain is worth $0.10/lb supposedly, then their "consumption is $0.20 a day." Then, if the price goes to $50/lb, then their consumption is "$100 a day." It doesn't matter to them, though. They just go on growing grain and eating it.

People don't "live on $1 a day income." They have a subsistence (nonmonetary) economy, instead of a market economy.

People today don't realize how cheap grain prices are.

Same can be said for fuel. (and the message on cheap food does need to be mentioned over and over)

Fuel remains cheap in an "absolute sense," in relation to the benefit gained, but in a historical sense, crude and natgas are both above their long term (inflation-adjusted) averages.

Better a vicious cycle with ethanol than a vicious cycle with oil in which we are in a perpetual state of hostage to oil companies and wars for oil security.

Mandates are the American way. Our life is full of mandates. Take cars for example: Safety belts. Pollution control devices. Lighting requirements. Insurance. I could go on and on. Americans are forced to pay for this stuff which many do not want.

Take housing: If you have tried to build a house in the city, the building code mandates are a huge cost. Further more the enforcers of the mandates are the very unions and building contractors who do the work. The code is the creation of the unions and the building contractors who lobby the local government for it. The local government compiles in the hope of more tax revenue from higher quality buildings.

Take education: Government and employers mandate certain educational achievements for graduation and employment. Government which is a huge portion of the economy is nothing but laws mandating behavior.

It is naive in the extreme to attack mandates. There is no way to effect the changes so often expressed here except by mandates.

Yes, at the moment corn farmers and those who bought land 30 years ago, like myself, are experiencing a bonanza, but it has been a long struggle and oil companies have been on a bonanza trip of unbelievable proportions with de facto oil subsidies in the forms of wars, the SPR, the oil depletion allowance (farmers do not get a soil depletion allowance), and royalty and lease payment shenanigans.

Isn't it odd that if we look at the crude oil price chart the up move started at about the time that two oil men entered the White House. Don't point out ethanol's influence without pointing out the overwhelming influence of Big Oil. Ethanol is just a small counter weight. If Big Oil wants votes to do its thing, politicians from states without oil have learned that they can get some largess too in the trade off. And why not? If it makes you angry, tough.

Copy of my post on Drumbeat:

From one of my Wall Street correspondents (no link):

Pilgrim's Pride to Shut Chicken Plant, Cut 1,100 Jobs
By Choy Leng Yeong

March 12 (Bloomberg) -- Pilgrim's Pride Corp., the world's
biggest poultry processor, will close a U.S. chicken-processing
plant, six distribution centers and cut 1,100 jobs because of
surging feed costs that have put the industry into ``crisis.'' . . .

. . .``Our company and industry are struggling to cope with
unprecedented increases in feed-ingredient costs this year due
largely to the U.S. government's ill-advised policy of providing
generous federal subsidies to corn-based ethanol blenders,''
Chief Executive Officer J. Clint Rivers said in the statement.

``Based on current commodity futures markets, our company's
total costs for corn and soybean meal to feed our flocks in
fiscal 2008 would be more than $1.3 billion higher than what they
were two years ago,'' Rivers said. . .

IMO, this is the similar to the problems facing conventional farmers and refiners. They have to respectively balance the cost of fuel & fertilizer and crude against the volume of the finished product that consumers can and will buy.

Pilgrim's Pride Corp., the world's biggest poultry processor, will close a U.S. chicken-processing plant, six distribution centers and cut 1,100 jobs because of surging feed costs that have put the industry into ``crisis.'' . . .

If only "Big Poultry" had managed to push through a chicken mandate.

"chicken coup"

Of course, I have not noticed the "oversupply" of poultry causing the price of chicken meat to decline. But that aside, the major plant closing is in Siler City, NC (the next county, Chatham, to the one in which I live), is just "one more thing" in the long chain of closures in the state. Smithfield Foods recently made the decision to eliminate and reduce animals on their farms for exactly the same reasons.

The underlying problem that is never addressed is the shear magnitude of the amount of energy which we in the states actually use and the "need" to keep doing more of the same. I guess economists figure that there are acceptable substitutes to food and water.

Isn't it odd that if we look at the crude oil price chart the up move started at about the time that two oil men entered the White House.

Actually, I was going to blame high oil prices on Hillary Clinton.

But here's an alternative explanation: Oil importers bidding for declining oil exports.

What we should have done is tax energy consumption and offset the tax by abolishing the highly regressive payroll tax, and used the energy tax revenue to fund Social Security & Medicare.

What we should have done is tax energy consumption and offset the tax by abolishing the highly regressive payroll tax, and used the energy tax revenue to fund Social Security & Medicare.

I can't believe i'm saying this but that's a really great idea.

Legions of people have proposed the same thing, but interestingly enough Texas oilman Boone Pickens endorsed the general idea before Al Gore did.

Seems a good idea to me and I'm not too surprised about Pickens. Out of the box thinker that one.

IRT your thread about Yergin day over on the drumbeat post. Sign me up!

*raises glass*

Peak oil!

I believe a country in Europe was seriously considering a carbon tax before pickens or Al Gore

I remember reading in the Wall Street Journal that an OPEC minister said something to the effect "if you want higher oil prices, why didnt you just ask us"

Static analysis is troublesome.


Regarding Europe, no argument, and as I said, "legions of people. . . "

In any case, per capita energy consumption is the EU is half of what it is in the US, and I suspect that high energy consumption taxes have lot to do with it.

BTW, It seems that all fiat currencies may be headed toward the same end, but in the short term, it seems to me that there is a fundamentally good reason for the dollar to decline relative to the Euro. Since per capita energy consumption in the US is twice what it is in the EU, it seems to me that the US economy is being hit harder by rising energy prices than is the EU economy.

X... member 1 week, 2 days ... <-----Troll as much as I want to feed trolls I'm not going to.. They feed on logic and crap out fallacies, conspiracy's and disinformation..

X is our corn farmer "Practical." I don't know why he changed his user name.

But we have had a rash of over the top, one-sided ethanol defenders show up lately. We probably got on some e-mail distribution of corn farmers, and they decided to dazzle us with "the facts."

IMO you should change your definition of folks who are dazzeling us with the facts from Corn Farmers to Ethanol Investors.

I happen to know many corn farmers who are convinced ethanol is a boondoggle, and believe grain prices will remain high inspite of Ethanol Expansion. Many are convinced that ethanol is upsetting the food chain as many are also cattle and hog farmers. Many are being driven out of their first love, cattle and hog farming.

You mean facts, like:

1) There are 2.6 lbs of corn in the one pound T-Bone you bought at the store, yesterday, and, due to the increase from the Gov't Subsidized price of $0.04/lb (which the cattle ranchers loved) to $0.10/lb the price of said steak is now $0.16 higher? Or,

2) The cost of your 14 oz box of corn flakes is up about Three Cents?

Oh, speaking of corn; it seems like there's more supply coming onto the market:


There are 2.6 lbs of corn in the one pound T-Bone you bought at the store, yesterday, and, due to the increase from the Gov't Subsidized price of $0.04/lb (which the cattle ranchers loved) to $0.10/lb the price of said steak is now $0.16 higher?

Incredible. And here I just heard about a bunch of poultry workers losing their jobs due to the impact of much higher corn prices. I must have misheard.

It's not the unions that keep the codes expensive, it's the localisation of young people costs that motivate the local governments to keep housing expensive so families with kids stay out. Office buildings and retail facilities pay much more in taxes than they cost in services.

Better a vicious cycle with ethanol than a vicious cycle with oil in which we are in a perpetual state of hostage to oil companies and wars for oil security.

You continue with this fallacy. You would have a point if this massive ethanol program had actually done anything to end that cycle of fossil fuel dependence. Has it? No, we continue to depend so heavily upon them that we have driven oil prices to $110 and natural gas prices to $10/MMBTU. The natural gas is of particular interest, because ethanol plants are putting increased pressure on demand. This is the whole point. This has done zip for energy security - while driving costs up across the board. But you think it's OK because you are one of the less than 1% who benefits at the expense of everyone else.

It is naive in the extreme to attack mandates.

I agree. Like I said, the solution is more mandates. Mandate that everyone buy 2 gallons of milk each week, everyone purchase a new car every 2 years, everyone buy a new computer. Jobs all around! We all win, just like you have won with this ethanol mandate.

Yes, at the moment corn farmers and those who bought land 30 years ago, like myself, are experiencing a bonanza, but it has been a long struggle...

Do you know how many people can make that same claim? Do you think farming is the only sector that has struggled? We could use your argument to justify a much higher level of mandates so that all of the struggling people can participate in the "benefits."

Isn't it odd that if we look at the crude oil price chart the up move started at about the time that two oil men entered the White House.

Yes, I suppose that with a different administration, the prospect of Peak Oil wouldn't be driving prices higher. Are you really as dumb as this, or have you simply run out of arguments - but still feel like you need to say something?

There was a science fiction story I read decades ago about a future where extreme automation and robotization had resulted in massive industrial output. In order to keep the system going, there was mandated per capita consumption. Moving up in society meant having to consume less. Those at the bottom worked long and hard to meet consumption mandates. Those at the top, having to consume less, had the most time for other pursuits like advanced education, arts, hobbies, travel, etc.

Wish I could find that story.

Look under Mack Reynolds. He did a couple with that premise. I think one was The Midas Plague.

If we were really interested in ethanol, we wouldn't have a tarriff on Brazilian ethanol, which actually has a pretty good energy balance.

This is a prime example of steal from the poor, give to ADM.

I have no problem with your analysis but haven't we had a surplus of corn over the years because of subsidies to corn farmers? And isn't the massive production of beef cattle in feedlots partially a result of this policy? Feeding cattle is one of the ways to get rid of all those mountains of corn.

I'm assuming that this system which has been geared to producing a lot of corn has something to do with the high level of meat consumption in this country.

As you point out, this system is breaking down, at least from the cattle producer's perspective, because of the ethanol subsidies and the mandates.

I am unhappy with the system both before and after the ethanol subsidies and mandates because, as a vegetarian, I eat a lot of organic fruits and vegetables which are not subsidized. And if an organic farmer wants to expand his fruit and vegetable business and the only land that is available has been put into corn, he pays twice. One, the land owner loses the subsidy and two, there is an actual penalty for putting the land into production of something other than the favored grains and soybeans.

Let's just call the whole thing off or let's subsidize everyone equally. But the corn/ethanol lobby is way too strong for that.

Further, I think we need to encourage relocalization; the current policies discourage that. It is not just about pure economics; the distortions are built into the system.

I have no problem with your analysis but haven't we had a surplus of corn over the years because of subsidies to corn farmers? And isn't the massive production of beef cattle in feedlots partially a result of this policy? Feeding cattle is one of the ways to get rid of all those mountains of corn.

This is an interesting comment, and touches on something I have said before. In most businesses, poor business decisions like overproduction are punished by letting companies reduce production or they go out of business. We treat farming totally differently (and we should to an extent). But what we do in many areas of agriculture is condone overproduction. When that causes prices to crash this should result in a scaling back of production. Instead, we attempt to increase demand with policies like ethanol mandates.

If car makers make too many autos, sales stagnate so they cut supply back. If corn farmers make too much corn, the government steps in and implements policies that ensure that they will continue producing as much as they can.


I'd appreciate you opinion of the relative shonkiness of ethanol/tar sands/biodiesel because as I see it they are now making a significant contribution to the gap left by falling crude oil, so if we have oil prices rising now what would happen if we withdrew these alternative sources? the upward price pressure might be to much for the US Fed to bear. Are we committed despite the consequences? a true dilemma

Neven MacEwan B.E. E&E


Ethanol does not add much, if any, energy to the system and it is having an inflationary effect so eliminating it does not present much of a dilemma from the points you made. The only positive I see in ethanol mandates is that it is possible to come up with a more efficient crop and the only hope we have is to have the infrastructure in place. Well, maybe one other positive could be that the corn exported is fetching a higher price (sadly, this starves off poorer people).


It may not add much "net energy" but it like all the others I mentioned transform gas to liquids, so it does add approx 1 mbpd to the liquid fuel supply, Has anyone considered EROEI for corn of liquids only?
What I see is that trying to remove 1+ mbpd from the liquids supply is going to be difficult, pulling 3-4 impossible (ethanol/tar sands/ biodiesel)

Ethanol is making our (New Zealand) Dairy farmers v. happy, we are waiting for the drought, corn drought cull of stock to do the same for meat (which has been in a lull because of the oversupply caused by this)


I'd appreciate you opinion of the relative shonkiness of ethanol/tar sands/biodiesel because as I see it they are now making a significant contribution to the gap left by falling crude oil, so if we have oil prices rising now what would happen if we withdrew these alternative sources?

They are adding liquid fuel at the expense of natural gas supplies. All of those you mentioned require lots of natural gas. Did you know that natural gas is a perfectly good automotive fuel?

Here's a piece of trivia. We think of Brazil as the ethanol capital of the world, but with a smaller population they have 8 times the natural gas fleet of the U.S. They understand that it is foolish to use natural gas to turn into a liquid fuel, when natural gas is easy enough to use as is.

Interestingly, Brazil also consumes, says Nationmaster, 1,830,000 bbl of oil daily. That's 667.95 Mbbl annually, which for a population of 186 million is 3.6 bbl each annually. That's about the same as Argentina, Romania, Ukraine - not countries we typically think of as "eco-friendly".

It seems like if you have a lot of ethanol, you just consume ethanol and the oil you get - you don't stop consuming oil.

Really? How much would it cost me to convert my two vehicles to Natural Gas?

Of course, I'd have to talk my filling station into carrying it; how much do you suppose it would cost them to convert?

Really? How much would it cost me to convert my two vehicles to Natural Gas?


But you are asking the wrong question. You wouldn't convert your current vehicles (although depending on how far you drive and the delta between fuels, it may be worth it). But if we want to move away from petroleum, we encourage the adoption of more CNG vehicles and skip the ethanol step. CNG is not rocket science.

Of course, I'd have to talk my filling station into carrying it; how much do you suppose it would cost them to convert?

Less that it would cost to put in E85 pumps and tanks.

Isn't this where I am supposed to say "If Brazil can do it..."

It seems like the "Right" question to me. If we're going to drop off the cliff in 3, or 4 years I need to do something NOW.

Didn't I read somewhere that it costs $15,000.00, or so, to convert an ICE to nat gas?

I, also, think I read that it costs a filling station about $15,000.00 to add e85. Is Nat Gas cheaper than that?

Didn't I read somewhere that it costs $15,000.00, or so, to convert an ICE to nat gas?

I, also, think I read that it costs a filling station about $15,000.00 to add e85. Is Nat Gas cheaper than that?

You are about an order of magnitude too high on the natural gas conversion (which is still an ICE) and an order of magnitude too low on the E85 conversion.

I haven't got exact figures to hand but in the UK it is a fairly common thing to convert cars to liquid propane gas, and it costs of the order of £2k.

I don't know how closely or distantly related that is to converting for NG.

Thanks, Dave; I'm assuming (guessing) that it's a bit cheaper to go from liquid to liquid, than liquid to gas.

Robert would be surprised to know that I think we'll end up doing something along the "gas" line, eventually. You do get more energy from an acre of corn, or switchgrass, by converting it to gas than you do by converting it to liquid. Unfortunately, we can't do much along those lines, NOW. It'll be a gradual transition, IMHO.

Robert, have you seen Pimentel's analysis of sugarcane ethanol in Brazil?

RR, As long as ethanol was used to replace the MTBE additive, I supported it. That was a long time and many gallons of ethanol ago. Now its use is way beyond anything rational. Fortunately, this situation appears to be changing. Ethanol plants are going bankrupt or not being built. Even Congress is starting to have second thoughts. With blogs like yours in TOD we will eventually be able to end this experiment in bad farming. Maybe we will learn something from it.

RR, As long as ethanol was used to replace the MTBE additive, I supported it.

Ethanol does serve a function as an oxygenate in older vehicles. But without corn ethanol mandates, it is far more cost effective to make ethanol via a different route. The U.S. used lots of industrial ethanol prior to the mandates. How much of it do you think came from corn? That will give you an idea of just how much we are distorting the market with these policies.

Good question. How much did come from corn? Where did it come from? And, since ALL ethanol is eligible for the tax credit, why is this other source not used, today?

And, since ALL ethanol is eligible for the tax credit, why is this other source not used, today?

You are seriously misinformed. ALL ethanol is not eligible. Read the law.

Enlighten me. Where did this "Industrialized" ethanol come from? How was it made? What was the Process? And, What Ethanol is NOT covered in the law?

I think you're bluffing.

Where did this "Industrialized" ethanol come from? How was it made? What was the Process? And, What Ethanol is NOT covered in the law?

Are you serious? You don't know any of the history of ethanol, yet insist that all ethanol is covered? Tell you what. You think I am bluffing. Want to put some money on it? Don't you know how narrowly defined these ethanol subsidies are? The gasification guys were sweating bullets that they wouldn't get the subsidy. This is, IMO, the primary driver for calling their product "cellulosic ethanol" when it is really alcohol derived from gasification.

Nice Rant; but, you still have not answered the question. What was this "Industrialized" ethanol? How was it produced? When did they stop? And, what ethanol isn't covered?

Are you incapable of doing your own research? I am packing to leave town for a week, but you want me to stop and point you to things that you should be quite capable of finding yourself - if you really wanted to? The fact is, you have made a claim: All ethanol qualifies for the subsidy. How about you support that claim by pulling out the definition from the ethanol mandates? And then share with everyone what you found, and let us all know whether your claim was correct. If you are really interested in finding out the truth, you may spend an hour or so looking for it, but you will find it. And I don't have an hour to spare right now.

But I will give you one. Prior to the ethanol mandates, industrial ethanol was primarily produced in the U.S. from ethylene hydration. It should be intuitively obvious that ethanol subsidies would not go toward expanding that sort of ethanol production. But if it isn't, dig into the definitions.

Now, I was interrupted 4 times while trying to finish that, so I will go ahead and post while I have a chance.

Aw, what the heck. Here:


See Page 12 for definitions. Then the least you could do is admit to being wrong. :-)

No problemo, Hot Rod; I wuz rong.

But, I looked up Ethylene Hydration, and it looked pretty energy intensive (expensive;) How many btus of nat gas would be used for a gallon of ethanol in that process? And, just where were those ethanol refineries selling their moonshine?

"Are you incapable of doing your own research? I am packing to leave town for a week, but you want me to stop and point you to things that you should be quite capable of finding yourself - if you really wanted to?"

Some people do imagine that those online are their research assistants, yes.

Very good story, Robert!

US Government subsidies to promote ethanol production from corn is an act of desperation.

The US requires liquid fuels (gasoline, diesel, propane, ethanol, biodiesel) to enable economic growth, but it's having difficulty getting enough.

The US is in a recession. Unemployment is going up. The USD index is almost 72, a record low. Oil prices are at $US110, a record high. Gasoline prices are increasing. Increasing inflation could prevent the US Fed from further interest rate cuts.

Dick Cheney, US Vice President and ex CEO/Chairman of Halliburton, is visiting the Middle East soon.

A US attack on Iran could be a further, perhaps a final, act of desperation by the US Government. However, I really hope that does not occur, but...

"The resignation of the top U.S. military commander for the Middle East is setting off alarms that the Bush administration is intent on using military force to stop Iran's moves toward gaining nuclear weapons. In announcing his sudden resignation today following a report on his views in Esquire, Adm. William Fallon didn't directly deny that he differs with President Bush over at least some aspects of the president's policy on Iran."

Dick Cheney's trip to the Middle East has five stops: Israel, Oman, Palestinian West Bank, Turkey and Saudi Arabia. Dick Cheney has been peak oil aware since at least May 2004 when he said "By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? " I'm guessing that Dick Cheney will be asking Saudi Aramco "How much oil really remains in Ghawar?"

Perversely, a US attack on Iran could temporarily solve a few problems for the US:

One, potentially secure Iran's oil production, in addition to Iraq, for import to the US.
Two, prevent Iran from developing nuclear weapons.
Three, increase US military expenditure, acting a massive stimulus to the slowing US economy.

How would China and Russia react to a US invasion of Iran?

I can't imagine how they would expect to hold Iran down long enough to get any oil out of it.

It seems to me that Bush/Cheney believe the rhetoric from Saudi, that they can turn on the taps if they feel like it, and do not yet realise how tight supplies are.

They seem to have reached agreement with Israel, to take out the Iranian nuclear facilities.

The recent severings of undersea cables for the internet in the area look rather like a practise run.

I feel both China and Russia are getting alarmed about the increasingly erratic actions of the US, which in my view suffers from the fundamental problem that the position of Israel in the Middle East is unsustainable, and any US president for electoral reasons has to support Israel.

It will only be a few years until China can project power as far as the Middle East, and the US is rapidly weakening.

I doubt that the US government feels that it has any option but to take out the Iranian nuclear facilities though.

I think you forgot the biggest reason for such a US action: to distract and confuse the citizens of the USA just when oil and gasoline shortages are about to start anyway. An "enemy" to blame ("the tankers can't get through...blab blah blah" the CNN talent will explain) removes the reason to look inward and give Kunstlerian analysis of suburban sprawl its due. The govt will need people to cooperate as perhaps food rationing or who knows what starts. People will cooperate better if there's an "enemy" to blame for all the discomfort.

I know from talking to my family in the US how truly truly truly in denial they are about peak oil. My father (who loves his cars and has for fifty years) is sure the stock market is about to shoot upwards again.

Perhaps Fallon decided to leave before the action against Iran started. That was the rumor also about Karl Rove. "If you won't cooperate--you're out". It starts at the top but it won't end there I guess. It sure is a worry.

Note that the DOE announced--out of the blue--that they were going to fill the SPR to its current capacity, planning to have it full by October.

IMO, Ret. Lt. General Greg Newbold, a three star general who resigned prior to the Iraq War, in protest over the war plans, is to Iraq as Fallon may be to Iran.

Let's see. Why would they want to initiate action prior to November? Anyone? Anyone?

Fallon is a local guy (I hail from SE VA) and, from what I understand, a military genius. He is a huge loss to our forces as both a man of conscience and reason. We had an article in the local paper about him today.

Some time ago, as a military intelligence analyst, I had the chance to meet him briefly in early '01. Back then the buzz was about central Asia -- Afghanistan, Uzbekistan, and the activity of Al Qaeda. The next big war, they said, was going to be the war on terrorism. Uncanny how they had such clarity.

But reading the article gave me a little chill.

For my part, I hope we do not make a push into Iran. I hope Fallon's resignation was just on a difference of opinion that became public and not as a protest presaging an expanded war.

Dictatorial leaders often alienate their most talented generals. The countries they sit at the helm of often suffer from becoming involved in wars beyond their means to manage and in the end suffer defeat by overextension of resources and military forces.

Iran would be a nightmare -- not on the battlefield so much as on the world stage. The Arab world would be further inflamed and China, with key oil interests in Iran might be forced to respond. If the US invaded Iran, other major world powers might sever diplomatic ties with Washington -- Russia and China are the most visible but it would further alienate Europe as well.

In a very cynical assessment, such a move might well be a bid by the Bush administration to short-circuit the voting process in order to retain power.

It is a dire scenario and one I really don't like to think about, much less bet on. But in a resource-constrained world, and given the very narrow world-view of some of the players involved I wouldn't be surprised if something happened.

There could be some kind of precipitating incident to start. A terrorist event. Some kind of maritime aggression on the part of Iran. Something odd involving nuclear materials. Anything really sensitive that could trigger an immediate military response. In the case of Iran, it wouldn't be too tough as they are already pretty aggressive with small boats in Persian Gulf waters and have shown aggressive tactics in southeastern Iraq.

Do you guys have any opinions as to likelihood? For my part, I really, really, hope something like this does not happen.

In April 2007, the US SPR was 689 mb crude. Steady filling of the SPR has increased inventory to almost 700 mbd as of March 12, 2008, by receiving crude oil as royalty in kind (RIK) deliveries from the Gulf of Mexico. Further scheduled RIK deliveries for Apr 08 through Jul 08 amount to 9 mb. This would bring the total to 709 mbd or 97.5% of its 727 mbd capacity.

In November, 2007, Scott Ritter thought that the likelihood was very high and the timing in April 2008, next month.

We take a look at items in the defense budget, the rapid conversion of heavy bombers to carry bunker-busting bombs on a specific time frame, the massive purchasing of oil to fill up the strategic oil reserve by April 2008. Everything points to April 2008 to being a month of some criticality. It also matches my analysis that the Bush administration will want to carry this out prior to the crazy political season of the summer of 2008.

On March 5, 2008 Ritter said patience and fortitude is the best policy.

On March 7, 2008, Ritter made comment on the US National Intelligence Estimate (NIE) report which concluded that Iran stopped its nuclear weapons programme in 2003.

By noting that Iran had stopped its nuclear weapons programme in 2003, the American intelligence report made moot the conclusions of the IAEA, since the UN inspectors would, of course, not detect ongoing evidence of a nuclear weapons programme that had been halted. But the conclusions of the NIE came with an alarming premise, that Iran had been pursuing nuclear weapons.


I have seen this game played before: as a chief inspector with the United Nations in Iraq, I participated in similar efforts to construct briefings composed of fragmentary sourcing of questionable quality. The end product, comprising visually-pleasing organisations charts, communications diagrams and procurement records, was used to brief the security council members in an effort to strengthen their resolve to confront a recalcitrant Iraq. These briefings generated the myth of a retained Iraqi WMD capability, which lived on until proven false in the aftermath of the US-British invasion and occupation of Iraq in 2003.

Iraq had been placed in the impossible position of having to prove a negative, a doomed process which led to war. I am fearful that the EU-3 is repeating this same process, demanding Iran refute something that doesn't exist except in the overactive imaginations of diplomats pre-programmed to accept at face value anything negative about Iran, regardless of its veracity. The implications of such a morally and intellectually shallow posture could very well be disastrous.

There's no news on Ritter's response to Fallon's resignation yet.

I don't know Ritter's motivation to say these things, but the US pressure on Iran is increasing and I sincerely hope that the policy of fortitude and patience is followed.

"the massive purchasing of oil to fill up the strategic oil reserve by April 2008"

Well so far since Jan 1st we have added 2.273 Million barrels to the SPR. Thats enogh to supply the US for 2 hours and 40 minutes!

People don't realize it, but "only" 3,000 people died at Pearl Harbor, same as 9-11. It doesn't take much at all to "change everything" in our country. We're looking at the receiving end of the "shooting fish in a barrel" game in the Middle East. This time, it's our men and women on aircraft carriers that have very effective anti-ship missiles waiting for them. How many people are on an aircraft carrier, 5,000? What will we call our "new Pearl Harbor" when twice as many people die as did in the original? Any guesses what our response will be when that happens? How dare another country effectively engage us in war!

I don't think Iranian shore to ship missiles are guaranteed to succeed in sinking US ships. We do have some pretty effective defense systems. Do you think this kind of attack on American naval forces in the gulf is imminent? If so, why?

My comments were referring to defensive actions taken by the Iranians in response to the U.S. crossing a certain line that merits escalation. I don't think it is in either side's interest to get into a war, but I think the Iranians are far more aware of the insanity of it than we are.

I am sure that you know more about ship defense systems than I do -- all I know is what I've read on the internet. However, what I have read about the supersonic antiship missiles (Sunburn and Yakhonts) is very scary. Has our military learned the lessons from the infamous "Millenium Challenge" war game where Gen. Van Riper used tactics that the average Oil Drummer would consider sensible?

An excellent article expressing these concerns is found at http://www.informationclearinghouse.info/article18687.htm. It was written by Dr. Michael Salla. One of the links from the article is to another article, here: http://www.bloomberg.com/apps/news?pid=20601070&sid=a5LkaU0wj714&refer=home.

The second article cites a memo written by Charles McQueary, head of the Pentagon's testing office to Ken Krieg, undersecretary of defense for acquisition. McQueary apparently says that his office will stop new ship orders from going forward until a solution to these missiles is found. A previous top weapons testing official from the Navy, Thomas Christie, is quoted as saying,

``The Navy recognized this was a major issue, and over the years, I had continued promises they were going to fully fund development and production'' of missiles that could replicate the Sizzler to help develop a defense against it, Christie said. ``They haven't.''

The effect is that in a conflict, the U.S. ``would send a billion-dollar platform loaded with equipment and crew into harm's way without some sort of confidence that we could defeat what is apparently a threat very near on the horizon,'' Christie said.

Navy defense against these kinds of weapons has become very well developed over the decades. That said, the Navy certainly isn't invulnerable. In a direct confrontation with a CBG on alert it would normally take a saturation attack with high tech weapons to penetrate defenses.

In the gulf, things are a bit tighter. But there is still room for a group of ships to maneuver and defend at sea. Tactics and the element of surprise play a huge role in the success or failure of any such attack. A silkworm fired at point blank from an unidentified container ship which the Navy does not suspect as potentially hostile could well penetrate ship-based defense systems. A massive attack of Sunburns and other cruise missiles in the straits of Hormuz might also be a very tough threat to defend against. Any ship caught with her pants down could take a hit (Stark). Ships in port are much tougher to defend as they're not mobile and may not have their air compliment for countermeasures.

That said, a CBG has a wide range of options -- ship based defense, air based defense, and a variety of variously effective countermeasures. Furthermore, the new RAM system is very advanced and well adapted to handling threats like the Sunburn.

I guess it really depends on the situation. If you preemptively go after most of the the mobile launchers then there's not much chance they'll get a crack at you. If they somehow anticipate an attack or decide to preempt on their own they could launch a saturation attack against ships in harbor and cause some serious damage. If they go after ships underway, with defense systems alert and aircraft aloft it's not so likely they'd cause as much damage unless the saturation was very high or the element of surprise very extreme.

It's not a cut and dry thing, really. It's dirty and there are lots of possibilities and potentials on either side of the equation.

Thanks for the encouragement. I hope that you are right.

US Naval defenses against Sunburn missiles are known to have shortcomings. Additionally, this is a Mach 3 missile. A French Exocet leaves a ship a 120-150 seconds to respond, quite difficult to counter in such a short time as demonstrated by the success of the Exocet. But the Sunburn? A ship has a mere 25-30 seconds to counter the Sunburn (also known as the 3M82 Mosquito).

Further, the primary means of avoiding such attacks is to stay on the move and out of view of the enemy. The Persian Gulf is so tiny that this is not possible. Hitting the US Navy in the Persian Gulf is pretty close to shooting ducks in a barrel. And yet the Bush administration keeps refusing to let them move out into the Indian Ocean where it would be safer.

Finally, the Sunburn does not require land based launchers. It is a cruise missile and can be launched from aircraft, including fighters approaching at very low level making them hard to detect.

Iran has the Sunburn, according to Russia itself. Our ships are exposed because of this. This is a significant piece of military hardware. To assume US ship defenses are automatically adequate against such a cruise missile is dangerously complacent. This missile does not guarantee Iran can sink a US ship but it suggests that things are not all rosy in terms of defending US naval vessels in and around the Persian Gulf.

GreyZone is right here ... "One does not simply walk into Mordor."


The Perisan Gulf is Persian, despite recent efforts to rename it. The U.S. clowning around in there is roughly equivalent to the Cuban missile crisis - right under their noses. If we want to protect our ships we've got to get all of their fighters from all 13 TABs, all of their patrol boats from a variety of locations, we'd need to invade and clear at least four islands and one of them is Qeshm, 67 miles long.

Get that done and the only remaining problem would be concealed Sunburns on the mainland which can still dominate a sixty mile long stretch of the Straight of Hormuz. Our carriers would have to steam two hours at top speed through that gauntlet, all the while clearly visible to shore based observes, and completely disrupting traffic during this time. If they remain in the Persian Gulf a land based strike with a Sunburn can reach roughly halfway across the gulf from any point on the mainland, and this presumes the Iranians have made no improvements in range to the Sunburn.

And then there is that small matter of those Soviet nuclear capable cruise missiles ... if the Russians are truly sick of our conduct, which could be the case given their very public backing of the Islamic Republic, and they've given a handful of warheads to them since they've got the plausible denial that they might have come from Pakistan or North Korea, well, what happens then?


We've failed in Iraq and that was inevitable. We've failed in Afghanistan and that could have been manageable but not with our current inept administration. We're already apparently sending "advisors" to Pakistan. All of this stuff is in motion and a lottery style draft system will be the final result ... and it could be we'll lose two carriers and a quartet of AEGIS cruises in a storm of Sunburns if the Iranians decide they might as well land the first punch.

Thanks, SCT and Greyzone, information is always good even if it is not pleasant to hear.

The Middle East sounds like that withdrawal we were talking about in connection with Rome the other day, Greyzone.

The position is clearly unsustainable.

Let's hope we make it to May.

I hope it doesn't happen too.

Just to bring the Iran issue into focus in terms of RR's ethanol critique, let's just say that both issues are GROSSLY distorting American policy (foreign policy and agricultural policy, respectively) and WHY??? Both because of the heavy emphasis on (in Kunstler's words) "keeping the cars running". So who cares about human life, or food affordability, or fairness, or what's really the decent thing to do----we gotta have our cars.....remember Cheney's words (not mine) "non-negotiable" (the American way of life, he was describing). He meant it too.

Speculations,Speculations,Speculations and may I add bad Speculations!

Take it easy folks, there will be no war/attack on Iran! At least wait until further notice.
Iran is simply trying to enhance their electricity supplies, what's so peculiar about that ?

It must be devastating to be an peaceful Iranian these days and google "Iran US Bush war"....

BTW .. arghh I just did that ::::
Results 1 - 10 of about 12,300,000 for Iran US Bush war

You are describing the disruption caused by government involvement in free markets, otherwise knows as fascism.

When the markets are distorted by force someone benefits who would not benefit if the market were still free, and likewise someone suffers who would not otherwise suffer were the market still free. The market is distorted and the signals between buyers and sellers become confused.

In this case the ethanol manufacturers built production facilities that economics would not justify, the corn growers got the message that corn is more in demand than it otherwise would be and they plant more corn than they otherwise would, and pay more for more land than they otherwise would. Prices of seed for planting has doubled this year. Fuel costs and fertilizer cost are up significantly.

Ultimately farmers will find that they made a mistake by bidding up land to such a high price. More corn entering the market will bring down the price and ultimately corn growers will face financial strain if not ruin; you cannot pay more for land than can be justified by what it can earn, and farmers are now paying too much. And consider what these excessive land prices have done to people who were trying to reposition themselves in rural communities as a means of dealing with the ultimate disaster we face post peak oil. Did government involvement make it easier or more difficult for them to acquire a place to make their own way?

This is really no different than the distortion caused by federal reserve easy credit that drove the housing bubble which first made it difficult for people to afford housing, and now may bring down the entire financial system in a 1930's style event.

Consider that government "solutions" are a hazard to your health. If you want to see then least human suffering as we struggle through the end of the industrial age, then kindly do not call for government solutions. Just call for them to get out of the way. If what alternative you think is a solution, is in really valid, then there is no need for it being forced upon us by government as it will have value and that value will draw capital to it. If your list of solutions has no value and must be subsidized or forced upon us, then it is no solution and will just waste resources as corn ethanol has.

If the markets work so well, how is it that we became dependent on nonrenewable sources of energy? Why didn't the markets price fossil fuels correctly? Is it possible that the markets do not understand what nonrenewable means? What else do the markets not understand? Letting markets dictate our lives seems insane.

Free markets are free people making choices for their own self benefit, absent force. Through most of human history we have not had free people making choices, but rather we have had the tyranny of slavery for the majority with the few ruling us; freedom and free markets are a rarity in history. So, why did you not ask if slavery works so well, "How is it that we became dempendent on nonrenewable sources of energy"?

Your question is nonsense, showing a bias against freedom in favor of slavery. It was human ingenuity that tapped the stored resources on the planet, not the economic system under which we operated. Did not the slave state of the USSR become dependent on nonrenewable resources just as well as did the slightly more free market economies of the West?

As a matter of fact, without the exploitation of nonrenewable sources of energy, the population of the planet would never have reached 6.6 billion, but rather would have languished under 1 billion, and you likely would never have come into existence.

The free market would continuously price fossil fuels adequately; unfortunately, there is substantial involvement of government force in the energy markets which distorts pricing. How do you arrive at the conclusion that fossil fuels are priced incorrectly (correct or incorrect being a value judgment in your mind), and if they are in fact priced incorrectly, how much of that came from government control of these markets and not free market pricing?

My view is that it is far more insane to allow politicians and bureaucrats to dictate our lives than it is to allow free markets to give us information about supply and demand. Too bad the information we receive through the market place is so distorted so as to confuse our decisions.

This is full of narrowly-defined conceits and straw men. It is true that if it were not for oil there would not be 6 billion people, and but that is no way a good state of affairs if you are going to attribute this to markets. A market is perfectly happy to overshoot and crash big time. The "market" would be perfectly happy to see those six billion reduced to one again. The markets don't care if demand destruction is accomplished through efficiency or through starvation of consumers. Your hatred for governments is equivalent to a lack of confidence in the ability to create and sustain democratic systems of governance. If it is impossible to reign in such actors and make our larger societies and states accountable and serve the long term general interests of the broader population, then we are in serious trouble, because markets aren't going to get it done nicely.

A free market cannot exist in unsustainable energy. Oil (and coal) is the foundation of the wealth of the modern age. Those who have it, have access to an ability to command production (for that is what wealth is) by the extraction of something which, once gone, is gone forever. They have every incentive to extract maximum value from their assets, and yet they are going to be faced with a post-peak-oil society in which it becomes increasingly difficult to convert money into real things. Those who use it are equally dependent, since every aspect of their society and civilization has become organized around the mobility that oil gives us.

"Free markets" work best when there is transparency of information, an ability to predict and model the future, rational actors on all sides, and fairly enforced laws and careful regulation to assure that the above conditions are met. I see no evidence that such a market has or will ever exist in energy. Producers, in order to gain maximal advantage in a situation, will attempt to obfuscate, propagandize, and hide the truth as long as possible. At the same time, this site has shown time and again how the impending and ongoing crisis is discounted by the shills and mouthpieces that do so and how non-rational people can be when confronted with something they do not want to hear. Relying on the free markets to provide information is fatuous when such markets can and will never exist.

"Your hatred for governments is equivalent to a lack of confidence in the ability to create and sustain democratic systems of governance."

A brilliant quote and very well said.

IMO, we get the government we deserve. Citizens should be responsible and involved. It is our right, our power, our sacred honor. Apathy and cynicism are terrible things and are best met with disdain.

“Your hatred for governments is equivalent to a lack of confidence in the ability to create and sustain democratic systems of governance.” Posted by Cosgrove

“IMO, we get the government we deserve. Citizens should be responsible and involved. It is our right, our power, our sacred honor. Apathy and cynicism are terrible things and are best met with disdain.” Posted by Robert Marston

Responding first to Marston’s statement, my own experience informs me that apathy, at least, is the norm, not the exception. In my own neighbourhood, the South of Market in San Francisco, I am a member of several task-forces and such officially designated, by the City organizations with the specific charge of providing community input to various branches of the City government. These groups almost all have a specified membership of around 20 seats, and all regularly have from two to five vacancies. In the group that was actually elected from out seven square block community, the South of Market Redevelopment Project Area Committee, at the time of the original election in April of ‘97 four or five candidates ran for seats and were the only name on the ballot; they ran unopposed. And only about 450 people bothered to turn out and vote, out of an electorate of about 6,000. This same dynamic held true back when I was in student government at S.F. State in the ‘70’s, a handful of people were fanatics, completely involved and did 90% of the work and therefore set 90% of the policy, while most of the rest came to meetings and put in the minimum required, while another handful of people simply dropped out altogether. Basically, being active and involved represents a time commitment, and few people are willing, after a regular workday to spend from 6-8 P.M. at a meeting hashing out the minutae of whatever issues are on the table.

And this doesn’t get into the fact that the track record for democratic government seems to consist of falling under the control of well organized, well funded special interests (usually, but not always corporate) who via campaign contributions, admen, hucksters and lobbyists buffalo the elected government and the generally detached, apathetic public alike. Privitization, corporate welfare, etc., anyone?

So, from observing human nature regarding the reluctance to participate and the larger dynamic, it seems Henry is quite justified in his cynicism regarding “our ability to create and sustain democratic systems of governance.”

Antoinetta III Posted on Oil Drum 3-12-08

Now here is an ugly case of cynicism if I ever saw one.

Given, corporations organize well but so do dictatorships. Efficiency was never the means or benefit of a healthy democracy. But creativity and diversity trumps efficiency long run any day. Democracies have a tendency to reinvent themselves every so often. Rigid power blocks atrophy and eventually fall prey to internal strife. Corporations seek monopoly power in the same way totalitarian governments seek dictatorial power. In the end, it is the responsibility of constituents to end unhealthy and stagnating power structures.

What was the famous quote?

"All that is necessary for evil to succeed is that good men do nothing." Elbert Hubbard

A foundational premise for democratic government.

It is little wonder to me that corporations would attack the foundation that preserves power for individuals and limits their own control as entities.

What people fail to understand these days is that effective government enhances the power of citizens as effective citizens enhance the benevolence of government. And while all corporations aren't all bad they do need to be kept in check now and then or they'll completely run amok.

Now and then, as after the great crash of 1929, it is necessary to save capitalism from itself -- as Roosevelt once said.

All that is necessary for evil to succeed is for there to be misunderstandings, fear, and doubt, which will always run hand-in-hand with an unmanageably complex society.

A foundational premise for as little government intervention as possible, democratic or otherwise.

The only reason we think capitalism should be saved from itself is because we are addicted to it, not unlike a junkie to heroin.

A Republic is representative government ruled by law (the Constitution). A democracy is direct government ruled by the majority (mob rule).

I do dislike government when it exceeds Constitutional authority. It is not just the blatant disregard for the law that offends me; it is also the total incompetence that we see when government acts, and the deliberate plunder of the average person for the benefit of those in power and their privileged friend that should offend us all.

I think equally offensive is the continuous attack on "free markets" by you proponents of more government imposition of economic fascism and socialism. You see the present day collusion of politicians and corporations to rig the market and you call this the free market instead of the reality, an alternative version of the fascism you are proposing yourselves. You can't seem to grasp that more of this interference in the what is left of the free market will just make things worse for the average person, not better. You cannot seem to grasp that you are advocating slavery, the opposite of freedom, when you advocate political rule of the market place. Economic freedom is not separate from political freedom; there is only one freedom. If government rules your economic life, then you do not, so they control you, and you economic survival is in their hands, not in your own.

No matter what we do, we are not going to avoid the forces of nature that will bring the human population back into balance with the earth. We may differ in our assessments of this "rebalancing"; mine is that 50% to 80% of the human population will perish over the next 50 years, beginning very soon.

I would like to see the least damage result in the post peak oil era. I think that will happen if we follow the more natural system, freedom, since the person responsible for your survival will be you and control of your destiny will be in your hands, not the hands of some politician or bureaucrat most interested in his own survival.

I can understand people being afraid, feeling not in control, and wanting someone to come along and make things better. This is what I hear when I read all these desperate proposals of what government needs to do to save us. Fear of the future is justifiable; refusal to take responsibility for yourself and instead wanting some "higher authority" to plunder another's resources to give you the illusion of safety is more in the category of terminal mental malfunction.

I think equally offensive is the continuous attack on "free markets"

What is even MORE offensive is people claiming that "free markets" exist, then want to argue over a mythical, non existent position.

Free markets are free people making choices for their own self benefit, absent force.

Really? Can you show us examples of these 'free markets' you speak of?

Your question is nonsense,

Without an actual free market - it strikes me that your response is more so.

Of course the free market has been compromised already by government intervention. So should be call for further compromise of what freedom is left, or should be call for restoration of freedom by withdrawal of government intervention?

I think my point was quite clear and logical.

Of course the free market has been compromised already by government intervention.

So ya got nothing.

I think my point was quite clear and logical.

When one speaks of something mythic and non-existent - it is easy for one to think what they said was clear and logical.

'Free Market' Acolytes always have excuses as to why the Sacred FM screwed up. It's always so plausible, secret 'central government' plots, intrigues by liberal college professors, 'speculators', hell, even sunspots could have compromised 'The Market' in their world view.

Truth is, 'The Market', as far as even warning us about the devastating effects of Peak Oil, couldn't even direct investment properly to the nearest Decade, much less the several decades in advance, needed to properly prepare for it financially and psychologically.

As far as Peak Oil and "The Market Place" goes, it couldn't find it's own ass with Both Silent Hands.

Well, first of all I was not making excuses for the free market. I was finding fault with fascism which is not the free market, but government force imposed on free people making free decisions.

Even if you do not understand it, your criticism is of rigged markets, not free markets, and of course rigged markets and the preservation of special interest are difficult to confront because of government enforcement of laws on behalf of the privileged few at the expense of the many. Free markets respond much more quickly than incalcitrant economies characterized by government enforced vested interest.

What can't find its (to correct your grammar, "it's" is a contraction for "it is", not a possessive form) own ass is the present system of government intervention in the economy, which is one of the major stumbling blocks in the development of possible alternatives, and to individuals following private plans for survival.

I think the fantasy of government taking charge and coming to the rescue appeals to weakness in the human psychic. It is scary to think that survival for most of us will come into question very soon; particularly then, people do not want to accept the reality that each of us is an individual, responsible for one's self. I fully understand the impulse to give up one's self to the collective in return for hoped for safety; unfortunately this is a delusion. It is a foregone conclusion that if government is put in charge of your survival, special interest will profit, bureaucrats will gain and exercise power, and your well being will be a secondary consideration. Can you say Katrina?

"You are describing the disruption caused by government involvement in free markets, otherwise knows as fascism."

Man what?

Government subisidies =


You posting from a cabin in the woods?

Wow. Then I guess there are Hitlers the world over.

The idea that government involvement in markets is “fascism” does have a basis, insofar as Mussolini himself (supposedly) defined fascism as the merger of business and government (corporatism). One can certainly make the argument that this is the system we in the industrialized west (especially the US) have been moving towards—though it would be foolish to make a false equivalency between our current system and Nazi Germany.

Where libertarians err in their argument is to assume that people have any idea what they’re talking about. Left-leaning people in the US can’t tell the difference between the genuinely non-statist views of Ron Paul and those of “free market” cronyists like John McCain or George Bush. Genuine libertarians, however, have nothing but distain for things like the military-industrial complex or subsidies to oil companies, or imperialistic wars.

Personally, I’m not sure what to think about all this. On the one hand, I’m not yet ready to give up on the idea of a “public good”. But the last two decades has done nothing to convince me that government (in the US at least) is remotely capable of providing such a public good anymore without utter capitulation to cronyism and special interests.

In the libertarians’ defense we have no idea where we would be resource or otherwise in a genuine “free market” system, because no such animal has ever existed.

Capitalism 101

What's so freaking great about the 'free market'? Free markets are money making machines that (on occasion) KILL. There is nothing inherent in the concept of a 'free market' to prevent slavery or poison food or genocide. There is no morality in business unless the government says there is. The free market never had a problem with genocide and slavery in the USA. In agriculture, free markets mean low prices, low quality and funky food (Chinese apple juice, animal feed with ground up plastic(melamine) in it). It's almost a law of economics that the freer the market the lower the price, the lower the quality.

There was a free market in US agriculture in the 1920s which lead to overproduction, falling prices and soil exhaustion. Since the only way a farmer can make a profit is by producing more, he soon lowers his prices--that's a vicious cycle.

The benefit of the overproduction is the middleman/marketer who raises his charge to consumers in droughts and pays lower prices for inputs in times of surplus and makes money coming and going.

The oil companies aren't idiots. They are mainly marketers/middlemen of oil products.

Ethanol companies OTH are producers and are therefore at the 'mercy of the markets'.

The oil companies don't make ethanol and don't want it.

The problem is that oil is disappearing. The market based decision is for consumers to use much less oil which makes the oil company marketers unhappy.

Consumers therefore do an end run around marketers and
support ethanol subsidies(or oil subsidies, etc.).

Now libertarians are unhappy that consumers and producers aren't 'playing the game' which has ALWAYS been stacked against them.


Again, I really think people are not familiar with the actual underpinnings of libertarian thought.

“There is nothing inherent in the concept of a 'free market' to prevent slavery . . .”

Well, I don’t know about “free market,” but as I understand it the libertarian ideal is absolutely against slavery and coercion of any sort, whatsoever. This is why they are so fanatical about the constitution and individual rights.

“In agriculture, free markets mean low prices, low quality and funky food (Chinese apple juice, animal feed with ground up plastic(melamine) in it).”

Where is there a free market in agriculture? The current system of food production is so run through with subsidies it’s hard to know what the price mechanism would turn out. There’s plenty of evidence that it’s subsidies that give us funky food (high fructose corn syrup) and cause the destruction of local agriculture around the world. This debate has been going on with the U.S. and the E.U. for some time, and really speaks to the hypocrisy of first world countries who preach free markets to the world and won’t give up their own subsidies.

My point is this: the giant corporations who we all loathe are inseparable from the governments and government policies—at all levels—that make their business models possible.

This is as evident in ethanol mandates as it is in our sickeningly bloated military budget, or on a more local scale, road-building and zoning laws that are designed to stack the deck so heavily in favor of suburban sprawl as to make it impossible to build anything else. (Laws which require certain number of parking spaces of parking per retail shop, for example).

The one thing I’m convinced of is the current framework of the debate is a sham.

Well, I don’t know about “free market,” but as I understand it the libertarian ideal is absolutely against slavery and coercion of any sort, whatsoever. This is why they are so fanatical about the constitution and individual rights."

LOL! Libs are fanatical about PROPERTY RIGHTS and also the right to shoot people.

"Where is there a free market in agriculture? The current system of food production is so run through with subsidies it’s hard to know what the price mechanism would turn out."

And why is that? Because without subsidies prices would be much higher! Is that a good thing? Not for the market! The market/middleman would lose customers and
production would fall as the producer would have to cover costs previously paid for with subsidies. Remember he makes money by buying low from producers and selling high to consumers. The government takes a little money from everyone and keeps prices low.

Tarrifs are different in that they limit the number of producers. The free-marketeers
don't like tarrifs because the middle men (and their libertarian fans) can't buy low anymore, though they can still screw consumers( sell high).

A 'free market' in agriculture is irrational, because consumers cannot elect not to eat.

"There’s plenty of evidence that it’s subsidies that give us funky food (high fructose corn syrup) and cause the destruction of local agriculture around the world. This debate has been going on with the U.S. and the E.U. for some time, and really speaks to the hypocrisy of first world countries who preach free markets to the world and won’t give up their own subsidies."

HFCS is strictly speaking bad for you but it is a very profitable commodity for confectioners. The destruction of local agriculture is being done by Third Worlders to Third Worlders. As a pro-Lib, you shouldn't pass moral judgements on what people should be able to do. I frankly think that you're right, but then I'm not a Lib.

"My point is this: the giant corporations who we all loathe are inseparable from the governments and government policies—at all levels—that make their business models possible."

I don't hear giant corporations attacking government policies( more the reverse). I hear mainly Lib economists and politicans attacking government policies. The truth is the economy is working okay for the markets but poorly for consumers. The pandering politican's solution-cut taxes(and subsidize) consumers!
A really stupid idea: for the free market to work they should subsidize producers to lower prices and let money work thru the system rather than end run the whole deal.

"(Laws which require certain number of parking spaces of parking per retail shop, for example)."

LOL, the dreaded offstreet parking! Well, if the business owner doesn't have to provide the spots for his own customers who will? (Uncle Sugar to the rescue!)

"The one thing I’m convinced of is the current framework of the debate is a sham."

Now that's something we can agree upon.

Again, I really think people are not familiar with the actual underpinnings of libertarian thought.

And neither does the Libertarian party.

If the Party wants to show what they have a workable plan and obtain support of the citizen via doing work that benefits the population where are the court watchers?

My point is this: the giant corporations who we all loathe are inseparable from the governments and government policies—at all levels—that make their business models possible.

And how much of the excesses you speak of include violations of existing laws?

In this case the ethanol manufacturers built production facilities that economics would not justify, the corn growers got the message that corn is more in demand than it otherwise would be and they plant more corn than they otherwise would, and pay more for more land than they otherwise would. Prices of seed for planting has doubled this year. Fuel costs and fertilizer cost are up significantly.

This is a pretty good summary of why I feel like we are in such a vicious cycle. The government will never let corn growers get into trouble. So as they continue to expand and plant more, the government will constantly have to provide support to prevent the scenario in which prices crash. We have created a situation in which it is going to take billions of dollars each year to maintain - with benefits for a select few.

Nice sarcasm. Too bad it's true.

Robert, you're perpetuating an urban myth, namely that ethanol subsidies/mandates have something to do with energy policies.

The reality is that ethanol subsidies/mandates are agricultural subsidies, started by companies like ADM (to be sure, they don't help ranchers and dairymen). They always have been, and they still primarily are, to this day.

To suggest otherwise is to feed an inaccurate perception that energy policy is difficult, and prone to mistakes: "Don't be so sure that PHEV/EV's will work - look at how badly ethanol turned out!"

They've always been sold that way, but (almost) no one has believed it for a second until the last few years. Now, of course, some people are really hoping it will perform, but ag subsidies are still the most important political force supporting ethanol: farm income has close to doubled in the last couple years, entirely due to ethanol, and it would be political suicide for a politician to try to touch it.

You've heard of the "Ethanol Pledge", taken by all politicians in Iowa to maintain ethanol subsidies? Ethanol hasn't survived the last 30 years because it did anything for energy, it's because it was near and dear to farmers and food processors, especially ADM.

OK, here's some background info:


Robert, you're perpetuating an urban myth, namely that ethanol subsidies/mandates have something to do with energy policies.

It has something to do with energy policies, in that I am sure some of the politicians voting for expanding the mandate actually believe it is helpful. I think Bush truly believes he can mandate us toward energy independence by mandating a massive ethanol expansion.

"It has something to do with energy policies,"

Sure. I meant to say "an urban myth, namely that it (ethanol subsidies/mandates) is primarily motivated by energy policies", and ended up overstating a bit (I tried to provide the proper balance in the 4th paragraph). No question some people have been fooled, and now, of course, ethanol as energy policy is taking on a life of it's own to some extent. Bush, in particular, is always ready to engage in wishful thinking, and believe his own salesmanship.

But, wouldn't you agree that your article give the impression that energy policy is the prime mover, the motivation for ethanol subsidies? Further, wouldn't you agree that historically that's not true?

Did you like the Grist.org article?

While I entirely agree with RR on ethanol, I think it has to be put in the context of a whole host of false solutions to peak oil.

Which will do more damage: ethanol, coal, nuclear, tar sands? Ethanol wins in terms of immediacy because it competes with food. But on a slightly longer horizon, coal might win, because of pollution, CO2, water. Tars sands similarly, but because its so egregiously disastrous, reaction might prevent if from outdoing coal. In a longer term, nuclear, if it really revives, will bequeath our children and grandchildren problems they are in no position to handle.

There is no real choice in the longer term but radical retrenchment and a societal rebuild that is earth friendly, i.e. sustainable, based on renewable, i.e. biological (current, not dead and buried hydrocarbons) resources.

BTW, I was looking thru Gusher of Lies. I'm less inclined to gush over the book than RR, but there was a very interesting appendix: it listed various minierals (metals) that the US imports, what percentage of total used is imported (very many are 100% imported), and a few words describing their use. This appendix, if expanded, could make an extremely interesting book by itself, especially if it dealt with the relative abundance of these minerals world-wide, as well as criticality to our modern industrial society.

Ethanol is not a solution to peak oil, it's an agricultural subsidy. See my note above.

...whole host of false solutions to peak oil.

We don't disagree.

it's an agricultural subsidy.

Noted by others also.

BTW, I was looking thru Gusher of Lies. I'm less inclined to gush over the book than RR, but there was a very interesting appendix: it listed various minierals (metals) that the US imports, what percentage of total used is imported (very many are 100% imported), and a few words describing their use.

I also thought that was a very interesting table. The book itself has a lot of very good arguments in it. But it also has a lot that will have people - especially people who post here - saying "Now hold on a minute." But I thought it was really insightful in a number of areas, and it did thoroughly debunk a lot of myths.

nuclear, if it really revives, will bequeath our children and grandchildren problems they are in no position to handle.

Except, of course, if you have the sense God gave little apples you could burn up the 'waste' in reactors - it is fuel, not waste.

Technology does not stand still, and we can power our civilisation and deal perfectly well with the waste.

"We can deal perfectly well with the waste."

10,000 years of contrary evidence from civilized history notwithstanding.

And look at the way civilisation has stopped.

The big advantage of nuclear waste is that the volume is tiny compared to everything else.

If you generated all your electricity for the whole of your life with nuclear power you would have around 1.5 kilograms of waste per person.

For molten salt reactors that are on the drawing board at Fuji for production around 2023 (a molten salt reactor was working in the States in the 60's, killed off for political reasons), then you do around 1,000 times better - and the residuals are radioactive for a much shorter time.

So if you generated all your energy, not just current electric needs from it, you might have 5 or 6 grams of waste per person to deal with for a few hundred years.

For the absolutely intractable problem that we are constantly told that nuclear waste is, that is not too bad, is it?

Compare that to coal waste, or the greater mine waste from metal mining for windmills, for instance.

These reactors would use thorium, and 50 times more efficiently than current designs, so mining wastes would be limited.

"And look at the way civilization has stopped."

Utterly missing the point of looking at the cumulative way we have:
* fouled our nest with pollution
* pillaged the planet's one-time resources
* built socially and physically unsustainable living arrangements
* ushered in the Holocene extinction

These so far have failed to affect humanity negatively at all. As far as we're concerned on terms of evidence, these are matters of disapointing aesthetics.

Pollution and resource depletion have not yet affected humanity at all?


Mate, you need to broaden your reading a bit. The bloodiest war since WWII in the Congo, conflict in Bouganville, mercury spill in a Japanese harbour creating deformed babies, and... God, I just don't know where to start.

Dave, if you want a nuclear reactor in your backyard, by all means write to your MP. To be honest we're getting tired of hearing it in every fucking comments thread on every fucking article.

Please widen your range of discussion a bit.

You have obviously left all pretence of reasoned debate behind, perhaps because you are unwilling to expose your prejudices to reason, you have previously made claims such as that PV solar is commercially viable, when of course it relies on large subsidies, so in the absence of facts to back up your position rely on abuse.

FYI, if anyone was foolish enough to say that, for instance, conservation was not needed, I would also try to put the facts to them.

However, you have clearly left all adult discourse behind.

Do you really think it impressive that you know how to swear?
Perhaps you could widen your discussion from swearing in every post.

And I have a nuclear reactor within ten miles, thank you.

All power generation methods have large subsidies, so what.

I don't have profanity in every post, only when I'm talking to people like you :p Feel free to check and prove me wrong, I'm willing to be $100 that a larger proportion of your posts on TOD mention nuclear energy than my own posts have profanity. You bring it in at every opportunity, and make a few opportunities of your own, too.

Glad you've got a nuclear reactor near you, I hope you enjoy it. Write your MP and ask for another one. But please only bring it up here when relevant, we're getting sick of it.

You're a nuclear power fanatic, going on Churchill's description of a fanatic as "someone who never changes his mind or the topic." It's tiresome.

It's odd and revealing that you should feel that you have the right to swear at fellow posters for posting on the subjects that they choose - presumably reasonable manners and proper use of discussion forums apply to others, but not you?

Your need for profanity is also in fact revealing, not only about your poor manners, but it also shows your insecurity.

If you state that something is 'commercially viable', that would mean without subsidy, at least on the vast level that is current for PV solar power.

You are in fact trying it on, trying to mug anyone who has not actually looked at all closely at the data.

As you know enough to understand that you are trying to misrepresent data, and you can't even convince yourself that what you are saying makes any sense, your unease becomes aggression when you are confronted with reality.

If you would stop trying to fool yourself and others, and stop fantasising, then you could drop the aggression and resume adult discourse.

Your dream world is not very interesting for others, and very tiresome, please try to deal with the real world, not adjust it to suit your prejudices.

The disconnect becomes uncomfortable and leads to increasingly odd behaviour.

I've yet to abuse anyone on TOD; the profanity is used casually, talking about things and not people. Sometimes people do need a "what the fuck are you talking about, mate?" That's part of the rough and tumble of living in a society - there need not be deliberate blows, in a crowd there's just a bit of pushing around.

You can focus on the tone if you wish, but it has no bearing on the truth or falsity of what the person is saying. "One and one is two, damnit" is as true as "one and one is two, please."

Notice also that my tone has been effective. Had I said, "can you please stop talking about nuclear at every opportunity," I would have got, "no." But since I said, "we're fucking sick of it", now you talk about my tone instead. It's been an effective distraction from your favoured topic, for which we may all be grateful.

Just write a paper on why the world should go nuclear, or whatever else you see fit, publish that on TOD or elsewhere, and then every time the topic comes up you can just link to it. You'll be typing less in the end. Of course, that would be more informational and less missionary-like, so perhaps does not suit your true aims.

If you state that something is 'commercially viable', that would mean without subsidy, at least on the vast level that is current for PV solar power.

I said, "commercially proven," not "viable"; viable suggests future possibilities, "proven" talks about what's actually happened.

If that's your standard of commercially proven, that it's not received any subsidies, then I cannot think of a single thing in our society larger than an outhouse that is commercially proven. Roads are subsidised by the public purse, coal-fired stations are, nuclear is, swimming pools, people with mortgages in Australia have negative gearing, auto manufacturers get tax breaks, and so on and so forth.

Almost everything gets subsidies of one form or another. So what? If you're going to adopt, "it never got subsidies" as the standard, I'm afraid very little passes at all. It is then an absurd standard; I prefer using it in the sense that it's meant by the economists, that people have set the thing up and consider it worthwhile keeping and paying for, and have done so for some years.

If we're going to talk about wild fantasies, the idea that the world's going nuclear is rather a wilder one than the idea of the world going renewable. Of course you will respond that this is because the public is misinformed... but they've been "misinformed" for many years about this, and show no signs of changing their minds. People don't want nukes, overall. Whereas only some people don't want renewables. Some if I'm crazy for supporting renewables, you're much more crazy for supporting nuclear.

I would say rather that neither of us is crazy, that everyone can present their ideas for the future, we present them in public forums in person or online, they get discussed, and then the will of the public can be expressed in policy. That's democracy; not simply voting every few years, but this constant back-and-forth. Which sometimes will have profanity, haven't you ever watched Parliament on telly? :)

Dave spreads his own profanity around the internet though he tends to use abbreviations. An example: "WT[...] is ohmic electricity?" His particular question there ignored that ohmic was placed in parentheses. http://mdsolar.blogspot.com/2007/12/jet-fuel.html#c1369564907777846862

Deliberately misunderstanding is not as bad as his apparent practice of doctoring quotes: http://www.theoildrum.com/node/3610#comment-308098

You'll see also spin in his comments. The only molten salt reactor is an ongoing disaster, costing at least $130 million in cleanup costs which were needed to avoid a potential criticality accident: http://en.wikipedia.org/wiki/Molten-Salt_Reactor_Experiment#Decommissioning

What he claims is politics is not. The technology is a metalurgical nightmare and was dropped after a five year run on a four year design. It also developed a leak on final shutdown, a precautionary fact that should make us all hesitate over extending the lives of old reactors.


I know about Dave's posting style, it's characteristic of the One Trick Pony, the guy with only one topic of discussion.

As well as technical, etc issues, certainly there are politics involved in denying nuclear energy a chance. But I don't think that's a bad thing, because I believe in democracy. If the people don't want nukes, they shouldn't have them. If the people want to drive SUVs and eat burgers, they should be able to. However, this is coupled with free speech and elected government, so that private citizens may try to influence what the people want, and elected representatives may likewise give it a go. Since they're elected they get the additional tools of spending of public funds, regulations, tariffs and so on.

There are many among the bourgeoisie of the West who don't believe in democracy; but then, elites are often against letting the masses have their say.

I'm disappointed to hear the reactor was a "metallurgical nightmare." I'm always hoping some new technology will make things easier for us. If nothing else, a molten salt nuclear reactor would give us useful data and technical ability in handling molten salts with machinery, so that if we wanted to do solar thermal we could use salts.

Oh, and you should put a link to your webpage in your TOD profile, I keep losing it.

The molten salts used for solar are quite different, much less reactive: Na/K NO3. Both are commodities used in fertilizer.

I've added the link in my profile.

On another topic, you might be interested in this new work. Someone mentioned it to me last night. Apparently dams have cut sea level rise by 3 cm so that there is now a missing source of sea level rise.


Don't get so excited about "Molten Salt" reactors.

Pressurised water or gas-cooled is really the way to go, simply because it makes it orders of magnitude easier to deal with various failure modes gracefully.

The political reasons for killing off everything but pressurised water reactors in the 60's was a series of accidents, and developing the engineering to deal with those accidents. This is why the US does not have reactor fires like Chernobyl. We discovered that they could happen, were next to impossible to deal with safely, and rejected any technology that allowed for the slightest possibility of reactor fires. Steam releases such as the TMI event are daisies and butterflies by comparison, though I wouldn't want to be inside the containment if one happened.

Of course, practical gas-cooled reactors weren't developed until much later. It may be possible to get such a facility licensed in the US if the financing can be found, but FF energy will have to get significantly more expensive before that happens.

The new designs for them look very safe - technology has improved since they were discontinued in the States:

There is not much the matter with present designs though, and fuel burnup of 9-14 times present burn up is being looked at in Idaho.

Pressurised water or gas-cooled is really the way to go, simply because it makes it orders of magnitude easier to deal with various failure modes gracefully.

Compared to the liquid fuel fluoride reactors? Do you even know how these work? Or even whats involved in PWR's for that matter?

The political reasons for killing off everything but pressurised water reactors in the 60's was a series of accidents, and developing the engineering to deal with those accidents. This is why the US does not have reactor fires like Chernobyl.

Do you make your history up as you go along?

Liquid metal fast breeder reactors weren't killed off until the IFR funding was finally cut in the Clinton administration, and LMFBR's did have accidents, while the MSBR at ORNL demonstrated the technology without any incident whatsoever. The reason why the US doesn't have reactor fires like Chernobyl was the safety ethics that were adopted in the early 50's largely at the behest of Edward Teller.

Robert --

Over the past few months, I've come more to your way of thinking on corn ethanol. My hope, perhaps misguided, is that ethanol production will shift away from food crops over time. Biodeisel will also, hopefully, become more viable and less food intensive over time.

In any case, great article. You were spot on to point out the distortions that are happening in the food supply as a result.

Hi Robert,

I wonder if your father could just say no to corn? The price of organic beef is about twice as high as grain fed beef. As the regular beef price climbs, more people might be willing to switch over to eating less but better beef. Here's an intoductory link:
Some of the standards are available here:


I wonder if your father could just say no to corn? The price of organic beef is about twice as high as grain fed beef.

See, that's the issue. It costs a lot more to produce, and therefore the profit margins - which are already negative in many years - get worse. He does graze the cattle for the most part, and the corn is just supplementary. But imagine a situation in which this is how you have always raised your beef - it's the cumulation of a lifetime of how beef should be raised - and suddenly feed prices triple to benefit corn farmers in the Midwest. It is a bitter pill.

The irony is that we argued initially over my opposition to corn ethanol. He saw the farmer and rancher as allies over this issue - and he once asked me "How could you be against farmers?" He no longer sees it that way, and realizes that many of the things I warned him about are now coming true.

Hi Robert,

Some Texas ranchers are finding that they can get good results if they have a finishing pasture that includes legumes. I don't know if the soil where you father is could support this.

I don't see you as being against farmers. This ethanol thing looks like a bubble to me and a lot of people are going to lose their farms over it I think.


If we really wanted ethanol, we'd subsidize the refinery business to create it directly from fossil hydrocarbons. My guess is the fossil-carbon version of ethanol would be cheaper in an apples-to-apples comparison.

I wonder what will happen if one of the midwest ethanol plants is found cheating and converting its natgas allocation directly to product? Would that make the news?

My guess is the fossil-carbon version of ethanol would be cheaper in an apples-to-apples comparison.

That's how practically all industrial ethanol was produced prior to these market-distorting mandates.

Then why not still make it that way? It's not illegal; and, the subsidy (tax credit) still applies?

Then why not still make it that way? It's not illegal; and, the subsidy (tax credit) still applies?

Surely you jest. Tax credit does not apply.

What WAS this mysterious, industrial process that made ethanol? And, who were those corn ethanol plants selling to the last 30 years?

IIRC, the industrial process was just hydration of ethylene:

C2H4 + H2O -> C2H5OH

Dow Chemical is looking to do this in reverse to make ethylene feedstock from bio-ethanol; there's been some work on it in Brazil.

Poor people around here have corn stoves. Why? Because burning corn saves big $$$ at current prices.

I enjoyed reading your post Robert. I don't have an argument, instead, I'd like to offer my solution to the corn/fuel issue. Here are thoughts to consider;

1) At current grain prices, farmers recieve no government price supports which normally account for tens of billions per year. No subsidies are necesary to make money now.

2) The massive subsidies that farmers recieved when grains were cheap allowed farmers to produce grain FAR below cost of production.

3) All the excessive grain produced during the big subsidy era allowed human population to overshoot the planet's carrying capacity. (IMO)

4) My dad is feeling a pinch on the cattle portion of his operation. I feel for the livestock guy. Meats must take off as scarce feed = scarce meat.

5) $4 diesel operates pivots in Nebraska, with wells over 300 feet deep.

6) Nebraska is the nation's no. 2 corn producer.

7) Corn prices would skyrocket without biofuels for the same reason meats will ultimately explode in price; scarce and dear inputs lead to scarce output in time.

8) Corn prices would be MUCH higher if the National Corn Growers assn had focused on building better CORN STOVES rather than ethanol. Corn in a NON-subsidized corn stoves breaks even against $108 crude at roughly $7.20/bu. Corn is under $6.

9) Prior to 2004, the oil industry delivered a cheaper BTU to the market place than corn farmers did. Hence nobody operated corn stoves.

10) Since 2004, the corn farmer delivered a cheaper BTU to the marketplace than the petro industry. Hence UN-SUBSIDIZED corn stoves make economic sense.

11) There are 395,000 BTU in a bushel of corn. There are 160,000 BTU in a gal of heating oil. CORN WINS at today's prices.

In 2004 I proposed that the corn council use their millions in checkoff dollars to develope a super duper corn burning stove. That way corn would not fall below FF on a BTU basis. (Although it could rise above fossil fuels on a BTU basis, as it always had in the course of humanity prior to 2004)

The corn council chose instead to lobby for ethanol subsidies.

I believe in the power of "Free Markets". Had agriculture NOT been subsidized since WWI, grains, and then meats would NEVER gotten SO pitifully cheap. In turn this would of lead to rationing of food before the human pop got out of hand.

I maintain that the food subsidy which artificially bloated human population, brought Peak Oil to humanity many years quicker than would otherwise been the case.

Just food for thought. Thanks Robert for your well thought out post.


Correction on above; when I wrote $4 diesel, I simply meant that pivots set up to burn 50 cent non-road fuel won't burn scarce diesel without a run up in grains.

Using acres to grow crops for fuel is NOT new. Its as old as ag itself. Prior to the 1920's, a third of all ag production went to feed the horses that did the production.

Anybody who thinks that converting acres to fuel is abnormal obviously lived in the narrow period of human history where fuel was cheap.

I takes 5 acres to grow feed for 1 horse. In my area it takes 9 due to low rainfall.

Bryan and Robert, I feel for your families. However, I also believe that the rise in meat eating around the world is driving grain prices up far more than ethanol in the U.S. Meat eating is screwing up our water picture as well.

Since most corn in the U.S. is either fed to animals or exported (to feed to animals somewhere else?), diverting corn to fuel instead of meat will ultimately result in less meat consumption. But as I look around, I think our society would survive quite well eating less meat.

I am glad that someone made the point about the normality, and probably healthiness, of using some farm land to raise fuel. Well said, Bryan!

Finally, a bit about my situation. 1) I am a wind farm developer who is having a very hard time convincing farmers to sign up for wind turbines, because they don't need the money and they don't want to do anything which will interfere with their farming operations. 2) My intention has always been, once the wind energy gold rush runs its course, to get into serious corn stove utilization, because it is the natural gas picture which is really scary.

I takes 5 acres to grow feed for 1 horse

This simple fact is lost on a number of people here at TOD. If we are not going to have oil, sooner or later, and were not suppose to use ethanol or biodiesel in the long run, what are we going to do for fuel on the farm? Go back to 5 acres to grow feed for 1 horse days?

There is a certain irrational zeal around here that seems to think that any part of a farm's land set aside to grow fuel, be it hay, oats, biodiesel or ethanol is going to drive commodities prices up and starve poor people. In a word, Crapola.

Even electric tractors need to have fuel 'grown' (collected) using a calculatable area of land to harvest enough energy (fuel) using a certain number of square feet of solar collector or wind tower footprint.

There's no such thing as a free lunch, and there's no such thing as 'free' fuel. It ALL takes some amount of land out of potential food production.

Once FFs are gone, gone, gone kids, we will have to 'pick our poison' as far as 'growing' fuel is concerned. Fuel for farm equipment is best, and most cost effectively grown on the farm where it will be needed, be it horse or tractor.

5 acres to grow feed for 1 horse, how many for a tractor?

When your farm is out in the middle of NOWHERE, I suppose some of the anti biofuel geniuses around TOD think trucking the farm equipment fuel in from 100 miles away (from NOWHERE) is a much better EROI equation than growing it in situ.

Most here are perfectly clear that biofuel for the farm is likely to be needed.

However, it has nothing to do with the current debate, since in that case it would require no subsidy as it would be the best option.

Ethanol subsidies are designed to enable it to be used much more widely than on the farm , and it is that which is helping to drive up prices and take food from the plates of the poor.

Dave, you need to research this a little bit. 70% of the world's poorest, most poverty-stricken people are subsistence farmers that don't have a "cash-crop."

Many people think $5.00 Corn will go farther to reducing hunger than all the do-gooder U.N. programs, and NGOs in history.

And it is just unfortunate about the few hundred million city dwellers in the third world who will starve or suffer malnutrition if food gets expensive?

Most farmers in the third world are on land that can't grow corn anyway - sweet potatoes in Africa is nearer the mark.

I am not really sure what you mean anyway, since you refer to corn at $5 - $5for what? a bushel? If so that is half current prices.

Part of the biofuel dialog here at TOD is about BIg Ag vs Small Ag.

Anyone with some hand tools and a very modest piece of land can do Small Ag.

Big Ag, where most of the grain is grown, is Pure politics. It has almost nothing to do with technology per se, it is driven by laws, and subsidies and speculative greed on the part of non farmers. It has almost nothing to do with food because Big Ag grain is no longer food in any conventional sense of the word, it's currency, just like francs or deutschmarks or yuan or yen. It's a form of investment and banking to most non-farmer players in the field, not nourishment.

Producing ethanol on a small scale is also regulated by the Feds, it's not just the Big Ag welfare subsidies we're talking about. You need a permit from the Alcohol,Tobacco, and Firearms. The ATF is a law enforcement organization within the United States Department of Treasury. Yes, that's right, the Treasury Department controls ethanol on small farms, it's only logicial isn't it?

If TOD readers want to understand the history of ethanol in the US, discuss why John Rockefeller promoted Prohibition as a way to sabotage ethanol production. It's in the history books for curious minds.

Back before WWI, when ethanol ran most non-urban engines in America, John Rockefeller wanted to have the US standardize on gasoline for engines, not ethanol. He had a running disagreement, for years, about this with Henry Ford, whose early cars ran BOTH fuels (with a simple flip of a switch on the dash board).

The distillate gasoline really had no market, and Rockefeller would dump millions of gallons of gasoline into the rivers near his refineries at night, what a sweet man, because it was a waste product of the oil refining process. Rockefeller gave millions (that's when a million meant something) to the Women's Temperance League, to lobby Congress (all hard drinking males) to ban alcohol production in the US, you know, for Moral Reasons.

By the time Prohibition was over (1920 to 1933 in the United States) the infrastructure for alcohol (and ethanol) had been destroyed by Federal ATF agents and gasoline reminded the only engine fuel readily distributed in the US.

What a Coincidence for John Rockefeller and Standard Oil. It was like God Almighty had blessed his business model.

No politics here, just pure technical considerations and logical beneficent decisions for the Public Good. Amen

What I can find with a simple search says that a horse can plow about 3/4 acre per day.

A tractor can run on gasified crop wastes.  It takes roughly a gallon of diesel (140,000 BTU) to make one pass over an acre; figure 200,000 BTU of solid fuel into a gasogene to make 140,000 BTU of fuel gas.  An acre of corn producing 150 bu of grain also produces about 2 tons of excess stover, or ~30 million BTU worth (at 17.4 GJ/dry ton).  We might well get similar results from analyses of byproducts like nut shells.

There appears to be no real obstacle to running mechanized farms on energy they produce using relatively simple means.  The rest of society isn't so easy.

I hate corn ... US corn is not all that great, different forms of it are in everything we eat. America is developing allergies to it faster than the price is going up. The model T ford also ran on ethanol (you just pulled the little lever out, also called a choke to run on the clear stuff). If you drove in the city you ran on gas, if you drove in the country you stopped by the farmers field and bought some fresh brew from his still and you could drink some because it wasn't e85 (up until it became illegal)in 1920.

The farmers aren't getting subsidies anymore because those are based on a reasonable profit margin.

Road side stills will make it possible for the forty acre farmer to get by again. If there is a melt down like you all seem to think is coming this is what will make the countryside fun again. Keep the city folks in the city beating each other over the heads with clubs in gas lines and I can putter around the countryside in my slightly modified Honda.

Beef ain't that great either. And if any one is counting only 10% of our corn crop goes to human food and 60% of that is corn syrup which has about the same nutrition as poop.

Really Americans ought to start eating invasive species like jelly fish and bull frogs. I wouldn't be against us developing a taste for dogs and cats they seem pretty invasive to me too. I'm more tired of stepping in dog poop than seeing the price of corn going up.

For any one interested it's a $100 if sold as moonshine (but that's illegal). Heck why make E85 when we could just drink it straight out of the pump and after a few minutes of that who would care if the world was ending.

This is America baby, a farmer has the right to sell his crops to anyone he wants to as long as it's legal.

Ah, what an amazing laugh I just had because of this. Brilliant response.

Adam Smith explicitly assumed capital could not cross national boundaries. Within a geographically "local" community the "invisible hand" could work. It just wouldn't be all that invisible. Because the names and addresses of the people who are destroying the community (and the planet) would be posted. Such a posting today - in our technology, society and culture - is terrorism.


The larger scale governments - no matter what nationality the piranha - will not make matters better. None of them. They are structured to make matters worse. Because they are structured for growth (or plunder) and for the most part are wholly owned subsidiaries of the corporate class. The most charitable assessment might be to call the government "pod-people".

I don't see a single comment in this thread yet that suggests the whole paradigm is wrong. It can't be fixed. The more we try to do, the worse it gets. Quicksand. A finger trap. We need to relax and back off. Back off from 8B to 2B or less. Back off the economic churn we call prosperity. We need a new paradigm.

It's very hard to figure out what to do. It's easy to figure out what not to do. What we should not do is MORE.

And yeah, I wrote should, not will. We will certainly do the wrong things. The piranhas will swarm. It can't turn to violence though because it's already violent.

"Saying yes is destroying the planet." Richard Heinberg at the Soil Association.

This US government is illegitimate because it cannot meet the needs of the people. Those who operate it know that and are busy looting it. Paradign shift.

cfm in Gray, ME

At one point in each of our lives, mostly in experiences long lost to us, we had to learn how to use our individual bodies in order to cope with and navigate the universe. This natural learning process is then usually interrupted in "civilized" cultures through authority, hierarchy, and a rigidly enforced educational system.

At one point in our development as only one of many species on this planet, we learned ways of coexisting with our fellow humans and our local living environments, ways now in cultures mostly lost to us. Our development as a species has been similarly interrupted.

The tribal paradigms that worked sustainably for humans in the past were not designed from the top down. They were built from the bottom up. Like the few individual dividing cells following egg fertilization that end up as trillions of cells in a human being. Like the moment-to-moment thoughts and experiences following birth that end up as individual personality, anima, or empathy.

Our top-down paradigms in an unmanageably complex world inherently will end up creating more problems than they solve. This requires the system to grow, in order to provide new solutions to old problems, which create new problems, which requires the system to grow.

This paradigm has no choice but to attempt to destroy itself, given finite resources.

Can human society evolve to self-organize from the bottom-up, taking the best parts from both tribal and civilized systems? Or will we eventually extinguish ourselves?

thx for this post Robert, you pin the point. Bio-fuel is really bad for this planet. Bad, bad, bad...
Have those politicians access to a calculator?

Biofuels can do one thing: reduce the US current account deficit.

Turning an ever greater share of US corn to ethanol (and soybeans to biodiesel comes next) will cause in a few years halving US agricultural exports in volume and doubling them in dollars (i.e. quadrupling agricultural prices). That will substantially reduce the US current account deficit. The only problem is that, as the US and other countries follow that path, world food production will be lower and lower, and the poor wanting to eat will be outbid by the rich and middle class wanting to fill their tanks.

The US has every right to follow that path. What they must do is to tell the world openly that they will do it. Like: "A decade from now, our food exports will be substantially lower, and so will probably be total world food production. People, and particularly poor people, should have it in mind when making procreation decisions."

How high will food prices have to go before the public demands an end to ethanol mandates?

I don't think that's ever going to happen. What will probably happen is we will try to put another band-aide in place to deal with high food prices. Perhaps food stamps for everyone. And the costs just keep going up.

Farmers are now becoming dependent on these mandates; to pull them would be financially disastrous. The government is very unlikely - given the number of farm state politicians - to roll back the mandates. That's why this is going to be so incredibly costly.


I agree 100% that pulling a gov't program such as this one will not happen. Gov't programs don't end. Instead gov't creates new ones to fix the old one.

I think your food stamp prediction is spot on.

Windfall profit taxes for farmers won't make food cheaper, but it is likely IMO.

They end programs when they run out of money, which would leave a lot of people holding the sack, having bought farms at expensive rates due to the subsidy system.

As Peak Oil hits with full force governments are going to be hard pressed to come up with the money to either subsidize corn ethanol or food. Tax revenues will plunge along with the economy.

Wow! What a weird rant!

Where have I heard this before........

It's a 'Gusher of Lies' (Robert Ryder ☺)!

Oil, natural gas, and coal are the donut, corn ethanol is the hole (negative EROEI, CO2 generation, soil degradation, nasty wastes, and world hunger). Corn ethanol represents a last gasp effort of man to dominate nature. Like solar and wind, this "solution" only serves to dig us faster towards terminal oil depletion. This "solution" is promoted by ignorance among congressional leaders, the general public, the media, presidential candidates, and some "scientists." The public wants illusions and politicians and the media deliver them.

The Union of Concerned Scientists concluded that:

“Even if we used all our corn to make ethanol, with nothing left for food or animal feed, we could only displace perhaps 1.5 million barrels per day of this demand [U.S. consumption is 21 million barrels per day]. Clearly, corn ethanol is a part of the solution but by itself is not a sufficient long-term solution to our oil dependence. Ethanol is currently transported mainly by tanker truck or rail cars because it cannot be shipped in existing gasoline pipelines. The potential capacity for ethanol production from corn is fairly limited. In addition to concerns about feedstock limitations, corn ethanol derives much of its energy from fossil fuel inputs.” http://www.ucsusa.org/clean_energy/clean_energy_policies/renewing-where-...

In fact, a thorough study by Tad W. Patzek reveals that there is no net energy gain from the production of corn ethanol.

A 2007 study by the U.S. Congressional Research Service, “Ethanol and Biofuels: Agriculture, Infrastructure and Market Constraints Related to Expanded Production” concluded:

“While recent proposals have set the goal of significantly expanding biofuel supply in the coming decades, questions remain about the ability of the U.S. biofuel industry to meet rapidly increasing demand. Current U.S. biofuel supply relies almost exclusively on ethanol produced from Midwest corn. In 2006, 17% of the U.S. corn crop was used for ethanol production. To meet some of the higher ethanol production goals would require more corn than the United States currently produces, if all of the envisioned ethanol was made from corn. Due to the concerns with significant expansion in corn-based ethanol supply, interest has grown in expanding the market for biodiesel produced from soybeans and other oil crops. However, a significant increase in U.S. biofuels would likely require a movement away from food and grain crops. Other biofuel feedstock sources, including cellulosic biomass, are promising, but technological barriers make their future uncertain. Issues facing the U.S. biofuels industry include potential agricultural “feedstock” supplies, and the associated market and environmental effects of a major shift in U.S. agricultural production; the energy supply needed to grow feedstocks and process them into fuel; and barriers to expanded infrastructure needed to deliver more and more biofuels to the market….There are limits to the amount of biofuels that can be produced and questions about the net energy and environmental benefits they would provide. Further, rapid expansion of biofuel production may have many unintended and undesirable consequences for agricultural commodity costs, fossil energy use, and environmental degradation. As policies are implemented to promote ever-increasing use of biofuels, the goal of replacing petroleum use with agricultural products must be weighed against these other potential consequences.”

Citations found at page 18 of http://www.peakoilassociates.com/POAnalysis.html

Like solar and wind, this "solution" only serves to dig us faster towards terminal oil depletion.

So, what do you do, give up?

Try conservation, risk management, and planning for a world without fossil fuels. This is reality. Illusion is thinking that things will continue as they were, or that things will be a little worse. The illusion option will result in tens of millions more deaths right here in America. Many people on this site are opting for the illusion option.

You aren't going to get far without energy from somewhere.

If the impervious man-made surfaces of the USA were put under PV, we'd get a huge amount of energy out of it (70-odd quads/year of pure electricity, IIRC).  Something like Evergreen Solar's process looks like a good way to do it.


This is an FYI from ground zero for the ethanol business.

Today one of our crew had a nice lunch with the secretary of ag for the state and he showed up for an Iowa Power Fund hearing just to see what they do. They pounced on him after they heard what we're doing up here. They need a "poster child" - a home grown win they can show off, and we're getting all sorts of signs our efforts may be it. Renewable fertilizer alone would carry the day, the ammonia as a fuel in diesels has progressed much further than when I last reported, and the use of waste heat to generate greenhouse and aquaculture jobs pretty much seals the deal. The Iowa Department of Economic Development is quite fascinated with job creation and apparently has much to say about how things are done, so the 200+ production positions created by a middle sized wind driven ammonia plant are drawing a lot of attention. Getting one of these is like getting an ethanol plant and a big box store with one shot, which counts as a big win up here in the wilds.

We think the ammonia as a fuel stuff could get rolling in less than a year. There are systems out there with ammonia injection after the turbocharger phase and minor modifications to the fuel metering and engine monitoring. The changeover is something that could be factory produced as a kit and field installed by any mechanic.

Being equal parts coy and inflammatory I posted the following ad in employment sections in some newspapers in the region:

The answer, my friend, is blowing in the wind. http://strandedwind.org

And we've provided a story about 250 greencollar jobs coming to this little town that will stick to the top until it has served its purpose. Do note that we're reporting that one location is on track to funding but that we located two in the region. This will lead to economic development folks tracking me down and knocking on my door.


So, we're pretty sure we can fix ethanol's carbon and EROI problems by making the basis of it all wind driven, and the manner in which we've approached the problem fits the local sensibilities to the point that we get an enthusiastic response from pretty much all directions. I don't have a good answer for the global food security concerns so I just point out that this is the view outside our little green & gold bubble (very unpopular).

We're comfortable enough with Stranded Wind's infrastructure now that we publicized what we're going in a place with national reach earlier today and we've effectively hung out the "open" sign for our wind driven ammonia consulting operation. We have at least three or four of what I'd characterize as solid leads after today but we have been prepping folks with a flow of diaries for these last many weeks, so that is perhaps a skewed indication of interest.


We're taking the stance that our stuff is a win all around (except for big oil), that we don't mind associating with ethanol production in various ways, but we consider the potential for global food security concerns knocking the wheels off ethanol to be very high so we're going to be cautious about how close we get. Rather than taking a run directly at ethanol, which would be political suicide here, we'll be turning our attention to rail electrification just as soon as the wind driven ammonia is moving along to our liking, and letting peak oil help people sort out exactly how they ought to be going about getting from point A to point B.

Those in the business look nervous and those without a vested connection to ethanol all say the same thing - "Those guys are all going to go broke." I'm grateful for the economic energy its brought the state, even if it is a transient thing, because those ethanol plant builders are looking for the next big thing and I think we might have just the ticket for them.

I'd like to thank you for the work you're doing in this area. You won't win any popularity contests here but in quiet moments everyone admits they'd rather have advance notice as opposed to a surprise, and I'm referencing you in those discussions ...


We think the ammonia as a fuel stuff could get rolling in less than a year. There are systems out there with ammonia injection after the turbocharger phase and minor modifications to the fuel metering and engine monitoring. The changeover is something that could be factory produced as a kit and field installed by any mechanic.

And I don't think this proposal is completely unreasonable. I like the idea, I think technical viability is there, but it's going to take some scaling up and proof of concept. I do a lot of technology evaluations, and I frequently find a nasty devil lurking in the details. Here's hoping you don't have one here.

You won't win any popularity contests here but in quiet moments everyone admits they'd rather have advance notice as opposed to a surprise, and I'm referencing you in those discussions ...

When E3 Biofuels was building their (now bankrupt) plant in Nebraska, I wrote a positive article about them. They were trying to do something more environmentally responsible than the standard corn ethanol plant. I was contacted by their project manager following that article, and we talked quite a bit over several months. He said one day they hosted a congressional delegation, and my article on E3 was discussed. He said that while they liked that article, I was not a popular figure among the farm state politicians who knew who I was. One of them said "that a$$hole isn't doing us any favors." I guess it's a good thing I am not engaged in a popularity contest, nor running in the Iowa caucuses.


Once we have our ducks in a row I'd be happy to share the details of our project with you ... and we seem to have started something, because in another window I'm responding to something that may lead to a similar design job in another state and that isn't the only one to show up based on yesterday's article.

I haven't said anything because its a sensitive time due to an acquisition, but a similar process to what I describe above is underway for a location that will have an ethanol plant right next door - there are plenty of synergies - they need heat, ammonia has waste heat, etc, etc.

What you say greatly displeases those in the ethanol business but I don't see why they would have a problem with it. There are people in favor of ethanol, people against it, but you're just reporting on cause and effect. I would think they would be grateful for this ... I know I am, as it helps me to understand the issues the industry will have in the future. I get nothing but long faces when I carefully explain the whole global food security situation and suggest that perhaps a federal originated "stop!" is in the wings for the business.


I still think that ammonia as a fuel has most of the problems of hydrogen, but I wish you guys luck.

What you say greatly displeases those in the ethanol business

It's the difference between those who respect facts and those who judge everything by tribal affiliation; to the latter, voicing an inconvenient fact is disloyalty.

If your solid-state synthesis systems have a low enough capital cost to be idled much of the time, they'd work well as grid-connected systems to provide a market for off-peak production.  Do they?

That makes a heck of a lot of sense to me.

As you probably know, I am a proponent of nuclear energy, but more importantly I support using the right energy system in the right place, and it seems for this use you are using the best option.

Producing the fertiliser where it is needed is about as good as it gets, so good luck in your endeavours!

The government should mandate that ethanol production is only allowed by breweries and wineries.

Did you actually read the original article on land prices?

Ethanol, a biofuel made from corn, doesn't seem to be a major factor in the increase of farmland values, Zimmerman said, because the demand for ethanol accounts for only a small portion of the price of a bushel of corn.

So land price inflation being driven by our new bête noire, ethanol, is a myth.

Other factors look more important form the link, but OTOH demand always happens at the margin, so a relatively small increase in demand can lead to greatly increased price levels where the supply is limited, as it is for farmland in the absence of large amounts of land being released form set-aside.

Did you actually read the original article on land prices?

I did. Did you?

The trend is driven in part by record prices for commodities such as corn and soybeans, according to Paul Zimmerman, a spokesman for the Wisconsin Farm Bureau.

So a spokesman from the Farm Bureau says don't blame corn - thus, land price inflation from ethanol is a myth. I am glad your burden of proof is so stringent! I also heard that the Institute for Tobacco Studies said that smoking is good for you. There, another myth put to rest.

My apologies for the "did you read..." - that was rude of me. I'll be more civil going forward.

My question is what portion of the land price increases are being driven by corn planted specifically for ethanol production. What portion, OTOH, is being driven by land and commodity speculation, other commodity price increases, droughts and floods, lowered interest rates, general demand for non-renewable land, currency depreciation, peak food dynamics and so on. I don't have much to back this up, but it looks and sounds like an a-historical real estate bubble (16% per annum), similar to the residential housing bubble we are now painfully wallowing through.

The linked NYT piece you cite for the beneficiaries of this legislated boom states that most of the corn grown in the area is fed to livestock or used for other non-food products, and that the output from the ethanol process is used for livestock feed. There are also millions of acres not currently in production that could be pulled in.

And I don't get from this that the only beneficiaries are large growers. The article mentions small farmers worldwide may benefit. Ethanol plant construction companies may be the biggest winners.

Again, this suggests that whatever portion ethanol contributes to land price increases are more the result of an ethanol-meme than actual reality on the ground. So I'm grateful that you and others here at TOD are taking on and deflating the meme. Maybe the discussion will spare us yet another global financial meltdown.

This year ethanol based corn is expected to grow to 3.3B bushels (about 25% of all corn grown). Acreage increased to 92 million acres in 2007, up 19%. Increased acreage planted in corn is being offset by reduced planting of soybeans and cotton. Soybeans are making a comeback though, partly due to their use in biodiesel production. Soybeans are much less energy and fertilizer intensive than corn, so perhaps we should be steering the Congress-people that way. Although that would probably just fuel more bubble...

I guess one possible silver lining in all of this is that as the price of grains gets driven up, then the cost disadvantage of pasture-fed livestock decreases. Many of us believe that pasture-fed livestock is healthier - for the livestock, for consumers, and for the environment. The production of pasture-fed livestock can't be ramped up to replace the quantity lost as grain-fed confinement operation livestock declines, but many of us have been arguing that the meat component of western diets needs to shrink anyway.

In my opinion, protracted discussion of possible war with Iran is an invitation to digress from the subjects that TOD is best suited for, UNLESS one or more of our best informed contributors would be willing to examine how such an event might actually effect oil production, markets and likely responses from other Players with energy related interests in Iran.

It's just too complex for me to predict any but the most obvious consequences of such an adventure. It does seem that open violence against Iran is an extraordinarily bad idea in every sense that I can imagine.

Would not China step in to nullify any oil & gas advantage the US might hope to gain? Would not Russia protect its financial interests in Iran's emerging nuke powered electricity generation industry? Putin does not strike me as a neutral by-stander kind of guy. If I am correct in those two assumptions how does it serve the US's interests to interfere militarily in Irans nuclear weapons program so early in the game?

I just don't get it. What am I missing? Does it somehow save the US Dollar from its swan dive into the pavement (or is the swan 'song'?), but how could that be? We've already got a nice little war going and the economy is still as cold as a codfish.

This is an open request for information. Any takers?

The jabber about war with Iran is just another manifestation of the apocalyptic doomerism. Oil prices aren't rising fast enough, more grain than ever before is being grown, the University of Kassel in Germany has just completed an experiment showing they could be 100% renewable by 2050, there are just not enough apocalyptic things happening for the doomers.

So they have to make some up. "Oh no! War with Iran!"

Why not try sweet shogurm instead? I read an article about it the other day:

Sweet sorghum advantages

Renergie produces ethanol solely from sweet sorghum juice. This crop has received growing interest from the bioenergy community because it outperforms most alternative, firts generation energy crops. According to Renergie, the main advantages of producing ethanol from sweet soghum juice are:

High Yield – Sweet sorghum yields between 500 to 800 gallons of ethanol per acre (4700 to 7500 liters per hectare);

Water Efficient Crop – Sweet sorghum requires one-half of the water required to grow corn and one third of the water required to grow sugarcane;

Ability to Grow in Marginal Soil – Sweet sorghum can grow in marginal soils, ranging from heavy clay to light sand. Sweet sorghum has been called a “camel among crops,” owing to its wide adaptability, its marked resistance to drought and saline-alkaline soils, and tolerance to high temperature and waterlogging;

Not Harmful to the Environment – Sweet sorghum requires the use of only 40 to 60 pounds of nitrogen per acre whereas corn growers use more than 150 pounds per acre, according to the U.S. Environmental Protection Agency. Less fertilizer reduces the risk of water contamination. Producing ethanol from sweet sorghum, rather than increasing corn-to-ethanol production, reduces the risk of the continued formation of dead zones in the Gulf of Mexico;

Rapid Growth – Sweet sorghum takes only 4 months to reach maturity, which is short enough to allow harvesting twice a year. Sugarcane requires 14 months to reach maturity; and

Energy Efficient – The energy requirement for converting sweet sorghum juice into ethanol is less than half of that required to convert corn into ethanol. This is due to the fact that the sugars in sweet sorghum juice are fermented directly. There is no need to excessively heat the juice to breakdown starch into sugars as required for corn.

In 2007, China and India produced 1.3 billion gallons of ethanol from sweet sorghum juice. The Renergie project will be the first time that ethanol will be produced solely from sweet sorghum juice in the U.S.

Seems like a clear win compared to corn.


Renergy's got a Cool Business Model. I could very easily see something like their operation in every county in the Country in a few years. I love the way they're getting people "Invested" at a local level.

Hello all,

Ok. I'll go out on a limb and make a case not only for ethanol, but also for government mandates to help the industry. There is one major catch. I'm talking about Brazil and sugar cane ethanol. It makes a difference.
To begin with, I'll try to make the case for sugar ethanol, than I'll tell a little story. Some facts:
Sugarcane ethanol has an EROEI of 8 (against 1.4 for corn). Anyone who has sunk their teeth on a cane stalk knows how much sugar it packs. Sugarcane is an amazing little engine for turning sunlight into sugar/energy. Also in sugar's case you process the WHOLE stalk, not the seeds, and the crushed stalk than can be burned to generate electricity. This biomass is often enough to cover for all the Mill’s needs and even sell electricity off to the grid. Also, on the newer mills, the trucks and machinery run on a mix of diesel and ethanol, and even the crop duster planes fly on exclusively on ethanol. This eroei has even room to grow. In 2007, energy from bagasse actually generated amounted to around 3,725 MW. The association of Sugar Growers estimates that by changing existing boilers the capacity could easily reach 7,6 thousand MW, and by optimum utilization of bagasse and straw the sector predicts a generating capacity of 10 thousand MW.
Second, at least in the case of sugarcane and Brazil, ethanol production has not seriously impacted food production: Brazil produces about 4.8 billion gallons of ethanol from sugar cane in 6.3 million hectares. This is less than 2% of the area available for agriculture in Brazil (this calculation excludes the whole of the Amazon). This number is even more relevant when we consider that about 45% of the sugarcane produced in the country goes to make sugar, not ethanol. The government estimates that production could expand by a factor of 10, without seriously impacting other cultures or the Amazon.
Third. Sugarcane ethanol can have a positive environmental impact. The whole production cycle absorbs almost as much CO2 as it produces. The utilization of ethanol as a blend in gasoline (25%) coupled with the utilization of ethanol on flex-fuel vehicles avoids the emission of around 4.3 tons of CO2 in the atmosphere per year.
Fourth. Sugarcane, a tropical plant, might be used to mitigate the effects of Peak Oil especially in the poorer countries, in Africa, Asia and Latin America. Of the 50 poorest countries in the world, 38 are net importers of oil, and 25 import all the oil they consume. It is clear that the situation can only get worse as the prices go higher. In these very poor countries, famine and what oildrummers call die-offs are already a reality, and famine was widespread long before food prices went up . What keep the poor in the Third World from eating from eating is not a lack of food, but a lack of income. It is symptomatic that food prices went up mainly in the wake of the rise of China and India, as their incomes went up, they consumed more and better food. (more recently demand for corn ethanol also increased prices, but the phenomenon is older) .

And now for the little story:
The Brazilian experience in ethanol is already 30 years old, it began with the last oil shock. Desperately in need of oil it could ill afford (Brazil imported about 80% of its oil), Brazilians looked for domestic alternatives, and the proalcool program was born, first mixed with gasoline, than with cars running on e100. At one point in the mid 80s 90% of new cars were running on e100. My first car, a Fiat UNO, was one such vehicle, it gave me a little trouble to start in cold Sao Paulo mornings, but otherwise ran very well.
However, during the 90s, the price of oil got so cheap that sugar mills profited more from making sugar, instead of etanol (in the Brazilian process, the same mill can make sugar or ethanol basically at the flick of a switch). So there were HUGE cues at pumping stations and angry consumers stopped buying ethanol cars, which by then was also not competitive with cheap gas. It suddenly became very hard to buy ethanol cars, as production shrunk with demand.
The government, however maintained the prooalcool program by mandating a mix of ethanol on gasoline as an additive (in place of MTBE), mainly for environmental reasons. There was also a decision (I do not know if it was a mandate or not) to maintain an ethanol pump in every gas station that already had one, which protected those consumers who had invested on ethanol cars. Also the production of ethanol cars reduced drastically but never completely stopped, and, by the year 2000, the technology was much better (my wife bought a 10 year old GM sedan - a Monza - in 1998, and it run without a hitch. In 2001, when we left for the States and sold it still in very good condition (much better, in fact, than my own 3 year old gasoline powered Ford Escort…she claims that my poor driving skills would account for the difference, but still…).
After flex fuel cars were introduced in 2003 the whole picture changed because a) the consumers were not afraid of a supply shortage by ethanol producers and , of course, b) it was much cheaper than gas.
So this is the case, IMHO, for a government mandate. Without it, the Brazilian ethanol industry would never have gotten through the 90s. The decision to give ethanol a lifeline during the days of oil at US$ 10, and preserve an already extensive infra-structure to transport and store ethanol, as well as making sure that all cars could handle at least the amount of ethanol used as an additive, paid off when sugar cane ethanol again became competitive.
I do understand, however the risk of abuse, and it is possible (indeed it looks likely) that the US government might be sending the wrong signals by supporting corn ethanol to the extent it is, given its low eroei and immediate impact on food prices. Still, ethanol might deserve a chance. It will most probably not be the silver bullet some claim it would be, but it can help bridge the gap after PO, and in certain conditions really help poorer countries in the tropics not only lessen their oil bills, but also improve living conditions and income. To this end, developed countries with temperate climates might consider dropping clearly sub-optimal bets on corn (US) and /or sugar beets in the EU, and instead invest in better technology for cellulosic ethanol , as well as efficient mills in third world countries.