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Blame Ethanol for Spike in Gasoline Prices: Lutz...REALLY? SERIOUSLY?

Ag lining

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#1
One thing is true about ethanol; the consumer is charged 10% less than petrol per gallon. But a car gets 10% less gas mileage. You pay less money to go less distance. It is a wash. It's benefit cancels its loss out. So, you would think.

Unless you consider what it really costs the cunsumer. If a farm is altered to make switchgrass ie. ethanol, then that same field can't produce food. Therefore, expect food prices to go up.

But thats not all....... there is more.

In many cases, that FARM is paid not to produce food and that farm gets subsidies (the people's money) to not grow food. But what do they do with that FARM since they can't make food. ANSWER IS: they grow switchgrass-ethanol-energy AND GET PAID FOR IT TOO!!!!!

They are being paid twice for the same farm???? My .02
We are in one of those strange pseudo logic mousetraps with no exits where: Killing for peace is like F#@&ing for virginity.


http://finance.yahoo.com/blogs/breakout/blame-ethanol-spike-gasoline-prices-lutz-125424933.html

If the road to hell is paved with good intentions, as the old saying goes, than attempting to save Midwestern corn farmers by way of a Federal ethanol mandate is surely on a southbound highway of its own. This, as news about pain at the pump and the threat of rising gasoline prices swings into high gear.
But for all our analysis and rationalization that strife in the Middle East, summer driving season and growing overseas demand from places like China are keeping crude oil prices high, David Lutz, head of ETF trading at Stifel, Nicolaus says we're looking in the wrong place.
Related: Crude Oil's Fast & Furious Rise Will Hit Consumers Hard, Warns Kilburg
"As a result of the 2005 Clean Air Act, refiners need to blend a certain amount of ethanol into gasoline every year, and every year the amount they blend in goes higher and higher," Lutz says in the attached video.
He says as long as U.S. gasoline consumption is going up, the 10% ethanol blend mandate "is not a problem." However, he points out that American gasoline usage is currently down and has been falling for the past four years, and recently touched a 13-year low. As a result, Lutz says refiners have hit "the Blend Wall."
"It has created a situation where refiners have to mix 10% ethanol into the gasoline they make — even though the market can't consume it all," he says, noting that most vehicles on the road today can't handle any more than E-10, as the mixed gasoline is known.
Now here's the tricky part. In order to adhere to this federal mandate, Lutz says, refiners have been buying ethanol credits, known as RINs (Renewable Identification Numbers), to offset their obligations. Predictably, this surge in demand for RINs has pushed the price to record highs.
"The price of these credits has gone from pennies on the dollar at the beginning of this year to almost $1.40 today, including a massive spike up in the last couple of weeks," Lutz says. "I would think the recent move that we've seen in gasoline prices, towards year-to-date highs over the last four months, half of it has been due to this ethanol policy."
Adding to the dilemma is the fact that refiners are exporting the gasoline they can't sell here, which keeps inventories low and prices high. And if you think that's bad, just wait until E-15 comes to market in 2015. Despite protestations — from automakers, the AAA, refiners, oil producers, outdoor power equipment manufacturers, and the American Petroleum Institute — the Supreme Court refused to block the increased use of ethanol required by the EPA's Renewable Fuel Standards.
To be fair, Corn Belt states and bio-fuel advocates applaud the proposed increase and have argued that concerns are unwarranted and the risks overstated. But with an estimated 95% of the U.S. auto fleet unable to handle E-15 fuel (and the risk of having auto warranties voided if they do use it) — as well as some 700,000 gas stations, 3,000 miles of pipelines, and hundreds of millions of lawnmowers and generators and the like at risk — Congress is belatedly taking action in a bid to thwart a looming disaster.
Clearly there will be more hearings held on the matter, but it remains to be seen if the combined forces of big oil and small business are enough to slow the best intentions of the EPA and the drive to boost ethanol use by fifty percent.
 

TnAndy

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#2
One thing is true about ethanol; the consumer is charged 10% less than petrol per gallon. But a car gets 10% less gas mileage.


Your math is wrong for most blends used today.

Ethanol, gallon for gallon, does give about 10% less mileage due to lower energy content. But they are only putting 10-15% ethanol in a gallon.....meaning you get 10% less mileage on the 10-15%......a 1 to 1.5% reduction in mileage, since the remaining 85-90% is still gasoline.

NOW, if you're running E-85, 85% ethanol, then it would be close to a 10% reduction over pure gasoline.
 

smooth

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#3
I wonder how much energy and resources are consumed to create a gallon of ethanol, or if it is even net positive. Ethanol is scam, and would not even exist on a scale of any measure if it were not for the huge subsidies. If you just feel guilty and wanna do something for the environment, buy a tree from Al Gore.
 

TnAndy

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#4
Everything I've read says it's simply a sideways move energywise.....takes as much energy in the form of oil to plant, fertilize, harvest and process into ethanol as you get back in fuel. That of course doesn't count the depletion of the soil used to grow the corn, meaning it's really a loss all the way around.
 

Fanakapan

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#5
Better that than we should aim the Blame where it really belongs, ie, the Central Banks funding speculators for free, to enable them to 'Play' the oil market :rolleyes:
 

hoarder

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#6
I wonder how much energy and resources are consumed to create a gallon of ethanol, or if it is even net positive. Ethanol is scam, and would not even exist on a scale of any measure if it were not for the huge subsidies. If you just feel guilty and wanna do something for the environment, buy a tree from Al Gore.
I think it has more to do with control of the agricultural sector than helping the environment or the economy.
 

Ag lining

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#7
I think it has more to do with control of the agricultural sector than helping the environment or the economy.
That is what I think too. If you make profitability from the low to mid end of ANY enterprise non existent then you create monopoly, enslave the people, and ensure your 1%'er success regardless of management performance.

I wonder what the average pay of an American would be if you took the income numbers and then omitted the top 1% and the bottom 1%.

In statistics, it is often good and common practice to do just that-- in order to omit the flukes, anomalies, and outliers. It may help to get a better sense of the truth. But the impoverished/uneducated couldn't possibly know that. Therefore, they cannot mount a proper defense against unfairness in the land of the free. Streets are paved with gold if you can get to Flight level 18(000).

I would venture to guess that per capita (person) each American has an income of $7,500 per annum. That is excluding the top and the bottom 1% of individual entities (not just earners).

Black, white, tan, yellow, red..... equal opportunity enslavement is a more insidiously affective enslavement than all other types of slavery combined.
 

Ag lining

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#9
Dam corns up, just paid .50 cents an ear at publix.
Of course it is. The evil plan is this..... market forces will force everyone out of their cars and into limos and buses. The reason is simple and is like a rough pebble in the shoe. If you are given the choice by a puppet-gubermint to either have a car and pay the sky high gas prices or feed yourself food that is not imitation and made in Abbot labs (MRE's), then you will choose food.

Now, was that really a choice based on free will? Or just the illusion of free will? The right to chose is being redefined and no one seems to notice.

Deception is the name of the game imposed on the lame.
 

Rusty Shackelford

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#10
Your math is wrong for most blends used today.

Ethanol, gallon for gallon, does give about 10% less mileage due to lower energy content. But they are only putting 10-15% ethanol in a gallon.....meaning you get 10% less mileage on the 10-15%......a 1 to 1.5% reduction in mileage, since the remaining 85-90% is still gasoline.

NOW, if you're running E-85, 85% ethanol, then it would be close to a 10% reduction over pure gasoline.
Straight 87 octane costs the same as the 87 octane that is a 10-15% blend in my area.
 

TnAndy

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#11
Straight 87 octane costs the same as the 87 octane that is a 10-15% blend in my area.
About 10-20 cents higher here. Best price is at (get this) the farmer's co-op where they have a big sign "NO ETHANOL"......(we'll sell you the corn seed and fertilizer, but no, won't use your ethanol....ahahahahaaaa)

Worth it if you want to keep small engines running right, but I've tried both in a vehicle and can't honestly tell a lick of difference.

Add to that that I get 5% off on BP (they blend) using their card, and double rewards on certain weekends of the year ( Memorial day, the 4th, Labor Day, etc ) and the last time I filled my truck on the 4th, it was about a buck/gallon.
 

smooth

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#12
Straight 87 octane costs the same as the 87 octane that is a 10-15% blend in my area.
The last pump in my small town to offer non ethanol gas just rolled over. I now have to go to the next town over if I want really gasoline.
 

Oldmansmith

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#13
I wonder how much energy and resources are consumed to create a gallon of ethanol, or if it is even net positive. Ethanol is scam, and would not even exist on a scale of any measure if it were not for the huge subsidies. If you just feel guilty and wanna do something for the environment, buy a tree from Al Gore.
I remember a National Geographic article a year or two back that said the energy it produced was 1.2 to 1 of input. Of course that doesn't include the goobermint money spent, and the harder we have to work to pay for it, but that rings about true. The ethanol made from sugar cane in Brazil is 8:1 according to the same article, much better. But of course we can't import ethanol from Brazil, it is banned, though we can import oil from Venezuela and the Middle East to make fertilizer and run the machinery for the impressive 1.2:1 "return:" on ethanol. Great living in a free country, lol.
 

D-FENZ

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#14
Henry Ford had high hopes for ethanol fueling his autos. It was the first fuel used in his experiments. Since he was using his own money, it soon became clear to him that it wouldn't work and the best fuel for internal combustion engines was gasoline. Ethanol didn't work then and it doesn't work now, even after untold billions in subsidies over the last half a century.

The scheme to burn our food can be uncovered by rounding up the usual suspects- greedy politicians. Notice the fattest of the cats Al Gore. When he was trying to win the presidency, farmers in the first-in-the-nation caucus state, Iowa, were promised that the ethanol subsidies would continue to flow. In fact any other position would be political suicide. Without some momentum from a good showing in the largest corn producing state, candidacies soon fade. Just about every presidential wannabe coming to the first caucus sings ethanol praises. Now that Al Gore isn't running for office and has his own huge power base and wealth outside of politics, his position has changed. He admits that ethanol actually contributes to global warming- or whatever he calls it now.

Sometimes even the smallest details can have the largest impacts- Rotating the first caucuses and primaries between all of the states would at least shake up the ethanol debate. Just maybe, at least that truth would come out.
 

Dakota

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#15
Dam corns up, just paid .50 cents an ear at publix.
Don't know to tell you this except to say straight out that sweet corn (roasting ears) is not the same as field corn. The biggest market for field corn is export to other countries. Another shocking bit of news is that the corn grower (farmer to you city slickers) receives no government subsidies for growing corn, just market price.
 

hoarder

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#16
Don't know to tell you this except to say straight out that sweet corn (roasting ears) is not the same as field corn. The biggest market for field corn is export to other countries. Another shocking bit of news is that the corn grower (farmer to you city slickers) receives no government subsidies for growing corn, just market price.
What does "market price" mean? Does it mean law of supply and demand from individuals or law of supply and demand from government and individuals. If the government subsidizes the purchasing or use of corn then it is in fact a handout to farmers at taxpayers expense.
 

D-FENZ

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#17
Another shocking bit of news is that the corn grower (farmer to you city slickers) receives no government subsidies for growing corn, just market price.
Are you for real? Puleez... Let's just start with this shocking bit of news- At least 42 percent of the corn grown is used for ethanol production. Take that percentage out of demand and maybe even you would be able to say what would happen to the corn price (yes, it would go down -along with meat prices). The ONLY reason ethanol is used as fuel is because of government mandates. No one would burn it given an informed choice- In some states they get no choice at all. Yes, some dim bulbs buy it because it is cheaper per gallon- at the pump, forgetting about the mpg. The only reason it is cheaper per gallon at the pump is because it is not taxed, rather subsidized to the tune of about 4 billion dollars per year.

Google is seldom your friend but it may help you here.
 

Ensoniq

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#18
I wonder how much energy and resources are consumed to create a gallon of ethanol, or if it is even net positive. Ethanol is scam, and would not even exist on a scale of any measure if it were not for the huge subsidies. If you just feel guilty and wanna do something for the environment, buy a tree from Al Gore.
The problem with Ethanol as fuel is twofold
1) in gen 1 (corn) its being made from food, driving up food prices
2) federal regulation as subsidies are skewing the market and raising the cost

Some counter facts to consider
1) gen 2 or cellulosic is produced from waste and a theoretical cost of production point of 1/gallon is reasonable
2) the fed subsidies are attracting unserious actors to the sector. End subsidies and let the market show what it can do
3) INEOS bio in Vera beach is near start up, they are using the towns waste (yes they are emptying the dump for biomass) and will produce 8 million gallons a year and send energy back to the grid)
4) it's true there is a significantly lower mpg for ethanol than gasoline but what you ever hear is the almost comparable increase in horsepower when an engine is tuned to accept. This benifit can be taken as more HP per engine or smaller, lighter, cheaper engines producing the same HP

In summar, this Libertarian argues that the invisible hand will sort it out if the Feds get out of the way. I argue for no subsidies for any fuel. Let people make and buy what they want and winner wins.
 

hoarder

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#19
Henry Ford had high hopes for ethanol fueling his autos. It was the first fuel used in his experiments. Since he was using his own money, it soon became clear to him that it wouldn't work and the best fuel for internal combustion engines was gasoline. Ethanol didn't work then and it doesn't work now, even after untold billions in subsidies over the last half a century.

The scheme to burn our food can be uncovered by rounding up the usual suspects- greedy politicians. Notice the fattest of the cats Al Gore. When he was trying to win the presidency, farmers in the first-in-the-nation caucus state, Iowa, were promised that the ethanol subsidies would continue to flow. In fact any other position would be political suicide. Without some momentum from a good showing in the largest corn producing state, candidacies soon fade. Just about every presidential wannabe coming to the first caucus sings ethanol praises. Now that Al Gore isn't running for office and has his own huge power base and wealth outside of politics, his position has changed. He admits that ethanol actually contributes to global warming- or whatever he calls it now.

Sometimes even the smallest details can have the largest impacts- Rotating the first caucuses and primaries between all of the states would at least shake up the ethanol debate. Just maybe, at least that truth would come out.
His ideas involved the use of hemp ethanol/methanol, which is more viable than corn. Another thing to factor in cost-wise is that farmers could produce their own fuel, thus cutting out all the road use taxes, miscellaneous expenses and middlemen.
i
 

Dakota

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#20
What does "market price" mean? Does it mean law of supply and demand from individuals or law of supply and demand from government and individuals. If the government subsidizes the purchasing or use of corn then it is in fact a handout to farmers at taxpayers expense.
You don't know what the grain commodity market is? And you admitting that on a public forum? Wow!
 

hoarder

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#21
You don't know what the grain commodity market is? And you admitting that on a public forum? Wow!
You didn't answer my question so I take it you don't understand the law of supply and demand.
 

Dakota

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#22
You didn't answer my question so I take it you don't understand the law of supply and demand.
Sorry for not responding promptly but I was out growing my supply so that when a high market price demands that I sell I will have some on hand.