Bush's Gasoline Proposal Running on Fumes

By: Lowell
Published On: 1/23/2007 8:55:41 PM

So much for a headline "above the fold" for President Bush tonight on reducing our oil consumption.  Sadly, Bush appears to have caved once again to his buddies in the oil industry, and once again to have shown why he doesn't have the leadership skills needed to lead our great nation.  Instead of taking tough action on our "oil addiction" (the President's own words) for both environmental and geopolitical reasons, Bush apparently will offer two truly lame proposals:

1) Increased production of corn-based ethanol.  Let's leave aside for a moment the fact that using corn to fuel cars instead of feed people raises serious ethical questions in a hungry world.  And let's leave aside for the moment the fact that this increased demand for corn will - surprise, surprise! - raise the price of corn, beef, etc. (in fact, it already is doing so, with the cost of corn at 10-year highs).  Even leaving those two huge issues aside for the moment, the problems with increasing corn-based ethanol production are enormous. 

First, although there's debate on this subject, producing ethanol from corn takes a tremendous amount of energy, fertilizer, pesticides and water.  That's really dumb, even if those who say that you get less energy OUT of the ethanol process than you put INTO it are wrong.  Second, even if we turned all our corn production into ethanol, and therefore using up our corn supply to feed people and livestock, we're only talking about replacing a miniscule share (10%? 20% at most?) of our 21-million-barrel-per-day oil demand.  Third, this is just horrendous public policy, providing massive subsidies to a few rich companies like Archer Daniels Midland for...what purpose?  Let's face it, this is all about the kind of politics we all know and hate.  Weren't the last elections at least in part about changing that?!?  Lame.

2) Bush will propose a timid increase in fuel economy ("CAFE") standards for vehicles.  Cutting gasoline consumption 5% buy 2017?  OK, now, don't get too excited everyone, because cutting gasoline consumption by 5% translates int a whopping 450,000 barrels per day of savings, compared to current U.S. total oil consumption of 21 MILLION barrels per day.  Yeah, you read that right. And yeah it's utterly pathetic, especially when you consider that it takes over TEN YEARS to get there! 

All I can say is, thank goodness we're not in a war for our very civilization against ruthless enemies who want to destroy us.  Oh wait...isn't that what the Bush Administration has been arguing for the past 5 years?  But if that's the case, shouldn't we be taking draconian measures to reduce our consumption of oil from, just to pick a random example, the Middle East?  Shouldn't America be massively adjusting its priorities, just as it did in other great struggles against tyrannical foes (think World War II)?  Yes, but unfortunately, that would require leadership.  And, unfortunately, leadership is something that George W. Bush, and the entire Bush Republican Party, has proven itself completely incapable of offering. How many days until Election Day 2008?


Comments



Sierra Club comment (Lowell - 1/23/2007 9:25:28 PM)
Courtesy of Bloomberg:

``The policies accompanying the president's address are a retread of the same, tired package of drilling, weakened clean air protections and increased use of coal and nuclear power,'' Carl Pope, executive director of the Sierra Club, said in an e- mailed statement. ``When it comes to better solutions, the president talks about a destination without providing a map to get us there.''

Republican leadership: an oxymoron if I've ever heard one.



Oil imports (Lowell - 1/23/2007 9:28:15 PM)
1973: 6.0 million barrels per day (35% of demand)
2005:  12.5 million barrels per day (61% of demand)

That's right, oil imports have doubled since 1973.  And Bush is going to do WHAT about that?



Good Analysis... (Tomanus - 1/23/2007 9:48:15 PM)
Lowell, that is a good analysis based on economic fundamentals that are often ignored by most political pundits in the media.

Two additional factors seriously weaken the arguments for ethanol-based fuels (unless ethanol is used purely as additive). There are:
Ethanol has  much lower heat value than gasoline; something that leads to an overall lower fuel efficiency,
and its much higher life cycle costs compared with gasoline (you mentioned some of the aspects of these costs in your post).

It is quite remarkable how many people in the political and business arenas as well as in the media are sold to the idea. I just can listen to such disinformation anymore.
It is even more surprising that the idea is also gaining popularity in Europe.



Why is this blog shill for Big oil? (humanfont - 1/24/2007 12:04:35 AM)
Lowell I have a real hard time understanding why you are such a shill for big oil.  From your laughable analysis that there was no manipulation of the price of oil vs. our election; to this crazy assualt on ethanol. Just cause the price kept going down after the election doesn't prove there was no manipulation. Check out this article on MSNBC http://www.msnbc.msn.... With the election lost the Saudis and others are still motivated to keep the price dropping.

The SOTU specificaly mentioned that we needed to look at making ethanol from celulostic sources.  We don't eat woodchips, switch grass or corn stalks. The potential engery density of this agricultural waste is very high.  The food attack is a red-herring; probably backed by the oil companies. 
As progressives we need to strongly support ethanol and other biofuels.  At the local level Virginia needs to stop growning tobbacco, and start growning and refining biofuels. We need to take advantage of our wind resources off the eastern shore and in the mountains.  Virginia should set a state goal for reducing oil usage. 



Ha, that's hilarious! (Lowell - 1/24/2007 12:32:40 AM)
Me, a shill for big oil?  What are you smoking, exactly, cuz I want some!  Seriously, it's hard for me to think of any other industry that I dislike as intensely as big oil.  But corn-based ethanol?  What a nightmare.  Now, if we can get cellulosic ethanol going economically, that's a different story. But corn-based ethanol makes absolutely no sense, except to Archer Daniels Midland et al.  Oh, by the way, Big Oil is perfectly fine with corn-based ethanol; why do you think Bush put that in his SOTU speech?


Has anyone done a serious study (Catzmaw - 1/24/2007 12:33:19 AM)
on the collection and fuel costs associated with gathering all these wood chips, switch grass or corn stalks?  How much of each would it take to produce say, a gallon of fuel?  I'm a little confused about what exactly switch grass is, but it sounds like something low density that covers a lot of territory, which is positively true for corn stalks and possibly true for wood chips. Where would all the wood chips come from?  Would collection be done at the same time trees are harvested?  Would it be from lumber yards?  What is the process by which a bale(?) or whatever it's called of corn stalks would be converted to fuel?  What about waste products - what do we do with them?  Do they have any other use?  What kind of energy would be necessary in order convert a pile of wood chips or switch grass or corn stalks into a gallon of fuel? 

I think you're being a little unfair to Lowell, humanfont.  He's never said he's against alternative fuels, but he has tried to discuss the costs associated with alternative fuels, which frankly have not been squarely faced by many advocates of alternatives.  Don't get me wrong.  I'm all in favor of alternatives, but we have to think practically about how to get them in a comptetitive and cost-effective way. 



I'm not against alternative fuels (Lowell - 1/24/2007 12:42:17 AM)
...but yes, there have been studies, and the idea of running our transporation fleet on wood chips and switchgrass is simply laughable.  Replace 21 million barrels per day of oil consumption?  Try planting the entire country with switchgrass, and you still won't come close.  And using corn for fuel instead of food?  That's freakin' brilliant.  The answer is very simple:  cars that get 40, 50, 60, even 100 miles per gallon.  The technology's there, let's start using it!


Hardly laughable and easily acheivable. (humanfont - 1/24/2007 1:26:16 AM)
Per wikipedia:
"It has been estimated that in the United States, agricultural waste alone could be used to produce 3.7 billion barrels of oil per year. The USA currently consumes 7.5 billion barrels of oil per year."
http://en.wikipedia....

This is just using agricultural waste. Using algae farms we could easily make up the rest.  South Africa plans to produce almost a billion gallons per year from biodiesel reactors by building 90 reactors in the next 18 months. 
http://www.greenstar...

Finally I don't know what kind of messed up diet you eat, but as we switch to celulostic ethanol, we'll eat the corn kernels and get fuel form the stalks.  Using the whole plant brilliant!  This will negatively impact the corn maze industry but I think americans will be willing to pay that price.



Easily achievable? (Lowell - 1/24/2007 7:49:19 AM)
Turning agricultural waste into oil requires a process called Thermal depolymerization.  Right now, this technolgoy is in its infancy, with one plant in the US producing 500 barrels of oil per day.  That means we have just 20+ MILLION barrels per day to go!  In other words, we're not even close, and there's no sign of any frenzy to build ag-waste-to-oil plants.  Not exactly "easily achievable."

On corn-based ethanol, see here for a host of reasons why it's a bad idea, courtesy of the Sierra Club. For instance, "Replacing just one-eighth of U.S. gasoline consumption would require the country's entire corn crop." Or "Corn-based ethanol's contribution to fighting global warming is marginal at best."  Not good.

On switchgrass, here's what the Sierra Club has to say:

If it's energy independence you're interested in, it might be better to turn your world to switchgrass, the prairie grass touted by President George W. Bush in his 2006 State of the Union address. Fuel produced from switchgrass and plant waste is known as "cellulosic ethanol" and is generally considered environmentally preferable to corn-based fuel. It doesn't take a mountain of pesticides to grow and might (theoretically, at least) require much less energy to distill. A lot of research remains to be done before cellulosic ethanol will be ready for prime time.

"A lot of research remains to be done," not "easily achievable."  That's where we're at with cellulosic ethanol, so we're not going to be doing this anytime soon.  Until then, it's all corn-based ethanol, all the time.

Finally, according to thisU niversity of Georgia study, there seem to be some serious challenges with regard to switchgrass.  First off, according to this study, an acre of switchgrass produces about 480 gallons of ethanol (and I've seen other estimates that are as low as 100 gallons per acre).  As you point out, the United States consumes about 7.5 billion gallons of oil per year.  At 480 gallons of ethanol per acre, that would mean we'd have to use around 16 million acres of land to replace all our oil consumption.  (At 100 gallons per acre, it uses 75 million acres of land). That's a lot of land, considering that the US currently uses around 80 million acres for growing corn.  In other words, we would potentially almost all our corn-growing land for ethanol, leaving a lot less (or none at all) for food...

The second problem, according to the University of Georgia study, is that ethanol from switchgrass isn't particularly cheap to produce.  At 6 tons per acre (this may very well be optimistic if you look at other studies like http://www.ars.usda....), we're talking 82 cents per gallon, but that only includes the cost of growing the switchgrass.  It does NOT include any of the other costs (harvest, transportation, refining) required to produce ethanol.  According to the University of Georgia study, when transportation and "shrinkage" are added in, the cost goes up to about $1.02 per gallon.  That STILL doesn't include the cost of turning the switchgrass into ethanol, distribution and marketing, taxes, profit margin, etc.  Based on the fact that crude oil accounts for about half the price of gasoline, my guesstimate is that this raises the price of switchgrass-based ethanol to more than $2 per gallon.  About what gasoline costs today.

Meanwhile, although $2 per gallon isn't terrible, let's not forget the first paragraph.  Replacing corn production for food means that we're going to be significantly raising the price of corn and meat from animals fed corn. In order to compensate, we're either going to be chopping down Amazon rainforest to make up the missing feed, or the price of meat and other corn-based prodcuts is going to go WAY up.  In a world of 7 billion hungry people, that doesn't sound like a great idea to me.

Maybe, instead of doing all this, we need to start with the "low-hanging fruit," like doubling or tripling our vehicle fuel economy?  That's already technologically feasible so why don't we do it before we start tearing up our country to grow corn for SUV's (instead of the dinner table) or whatever?



And the Al Weed video on Switch grass - Ethanol is still out there (Used2Bneutral - 1/24/2007 8:49:58 AM)
It's an hour and 20 minutes counting the good business discussion with Q&A and unfortunately the lighting in the room was not optimal, but it is still quite watchable and hundreds of people have as well as downloaded the tape too......
here is the link http://video.google....

The TV Inside Scoop team put it up over a month ago.... Mark Levine is scheduled to do a whole show on it soon.



Read "Winning the Oil Endgame" (Dan - 1/24/2007 1:11:06 AM)
"Winning the Oil Endgame" by Amory Lovins explains better than anyone ever has about how to get off oil.  Read it for your answers.


By the way, you can make your points (Lowell - 1/24/2007 9:37:15 AM)
without ad hominem attacks.  Please stick to the facts as much as possible, and we can have a civil, informed discussion.  Thank you.


Good post (Dan - 1/24/2007 1:10:06 AM)
This President doesn't take anything seriously.  He has such a great opportunity to do something, yet he gives in to forces that do not control him.  He has no elections to win, just a legacy to protect.  What a chump.  Cheney obviously wears the pants in that relationship - and Cheney is evil.


Robert Samuelson on biofuels (Lowell - 1/24/2007 7:59:25 AM)
See here for the entire article.  Here's an excerpt:

...Bush set an interim target of 35 billion gallons in 2017 on the way to the administration's ultimate goal of 60 billion in 2030. Sounds great, but be wary. It may be a mirage.

The great danger of the biofuels craze is that it will divert us from stronger steps to limit dependence on foreign oil: higher fuel taxes to prod Americans to buy more gasoline-efficient vehicles and tougher federal fuel economy standards to force auto companies to produce them. True, Bush supports tougher -- but unspecified -- fuel economy standards. But the implied increase above today's 27.5 miles per gallon for cars is modest, because the administration expects gasoline savings from biofuels to be triple those from higher fuel economy standards.

Exactly right.  Samuelson continues:

Let's do some basic math. In 2006, Americans used about 7.5 billion barrels of oil. By 2030, that could increase about 30 percent to 9.8 billion barrels, projects the Energy Information Administration. Much of that rise would reflect higher gasoline demand. In 2030, there will be more people (an estimated 365 million vs. 300 million in 2006) and more vehicles (316 million vs. 225 million). At most, biofuels would address part of the increase in oil demand; it wouldn't reduce our oil use or import dependence from current levels.

More bad news:

...corn harvests won't be large enough to meet either the 35 billion- or 60 billion-gallon targets. Large amounts of "cellulosic" ethanol would also be needed -- the term referring to the cellulose in other plants to be converted to ethanol. Prime candidates are farm wastes, including wheat straw and cornstalks. Unfortunately, the chemistry for doing this is far more costly than it is for corn kernels. Without technological advances, cellulosic ethanol won't be economically viable. It could be supported only with massive federal subsidies or direct requirements forcing refiners to use the fuel, regardless of cost. Then the high costs would be passed on to consumers. Congress started down that path in 2005 by enacting a modest mandate for biofuel use.

Finally, Samuelson notes:

...there's also a real threat that the infatuation with biofuels is a political expediency that will turn into a classic government boondoggle, benefiting selected constituencies and providing few genuine public benefits. That has already happened with corn.

Ugh. Unfortunately, Samuelson is 100% correct in his analysis. As I said, Bush's gasoline proposal is completely "running on fumes."



The New York Times on ethanol (Lowell - 1/24/2007 8:03:58 AM)
See here for the entire article. Here are excerpts:

For an industry once dominated by the will of a single powerful producer, Archer Daniels Midland, ethanol has come a long way, joining the oil industry and producers of major agricultural commodities as an entrenched political force in Washington. And it now enjoys a powerful role in presidential politics because of Iowa's status as one of the first states to select delegates to the parties' nominating conventions.

But with dozens of new ethanol plants coming online this year, the ethanol lobby is facing a critical point. The political reality is that corn's days as the chief crop for making the fuel may be numbered.

Corn-based ethanol can only marginally reduce America's dependence on foreign oil. But it does little, if anything, to improve energy efficiency, and the mounting concern of some politicians is that relying on corn is leading to collateral damage in other parts of the agricultural economy and threatening the nation's status as the leading corn exporter. The big increase in the works may mean consumers would end up paying more at the supermarket.

So the ethanol lobby and its political supporters now face the challenge of trying to maintain the momentum of ethanol's feel-good story before the potential negative consequences of the rapid ramp-up become all too apparent.

Again, more support for my argument on increasing corn-based ethanol production.



One more quote from this article (Lowell - 1/24/2007 8:04:45 AM)
Lawrence J. Goldstein, a board member at the Energy Policy Research Foundation. "We cannot afford to have 15 billion gallons of corn-based ethanol in 2015, and that's exactly where we are headed."


"Why Corn-Based Ethanol is Bad for America" (Lowell - 1/24/2007 8:20:16 AM)
See here.  Also, I see that Waldo agrees.


reducing consumption is the first step to take (Tomanus - 1/24/2007 9:00:21 AM)
because of its lower heat value (leading to lower energy efficiency) and higher life cycle costs, ethanol (other small carbon alcohols as well) is just not a viable fuel alternative for hydrocarbons; and that is still ALL things considered for currently available technologies.

Given the size of US fuel (energy in general) consumption, there are significant efficiency gains realizable on the demand side if some policies can be developed to curb automobile fuel consumption (that could include some form of taxes) and to promote energy consumption efficiency in general.
However, that is often the "elephant in the room" during these debates on energy. No policymaker likes to talk about it because it is very unpopular as it will force changes in consumption habits. 



Exactly. (Lowell - 1/24/2007 9:09:14 AM)
Excellent analysis.


Bush is the ultimate oil man (Shenandoah Democrat - 1/24/2007 9:33:18 AM)
Lowell and Samuelson are right. There are major problems and issues with ethanol that will greatly complicate our agricultural base. The idea that we're already causing corn prices to go up, along with prices for beef, pork, etc. because we have to fuel our gas guzzling SUV's with ethanol is pretty disgusting.
The fact is any effective energy policy starts with conservation. If Jimmy Carter's fuel economy standards, enacted in 1979, were still in effect we would have reduced consumption to the point that we could eliminate imports of Middle East oil; instead we're fighting a war so American oil companies have giant new fields to drill, prolonging our oil dependence. The simplest, fastest and most cost effective strategy is resource conservation. The Bush Administration, marinated in crude as it is, is simply not intellectually equipped or open-minded enough to understand that.


Exactly! (Lowell - 1/24/2007 9:37:53 AM)
Agree 100%.


More commentary on ethanol (Lowell - 1/24/2007 9:43:10 AM)
Courtesy of David Campbell at VB Dems Blog:

This year, President Bush pledged to cut gasoline use by 20 percent in ten years by increasing use of ethanol. That's like an alcoholic proudly announcing that he is switching from Bud to Bud Light.

Ethanol is not the answer. It is renewable and domestic, but it is a net energy-loser. Making ethanol requires 29 percent more fossil fuel energy than the ethanol fuel contains. It is only slightly better than gasoline in terms of greenhouse gas emissions. Ethanol has less to do with saving the environment and a lot more to do with campaign contributions from the powerful corn lobby. Unfortunately, it will receive support from both Republicans and Democrats from farm states. The TV camera immediately focused on a jubilant Congressman from Iowa.

If President Bush is really serious about mandatory fuel economy standards for all vehicles, energy efficiency, and investment in developing solar, wind, wave, and geothermal energy, he will deserve our applause. The Democratic Congress should waste no time in sending him a comprehensive energy bill.

Exactly right. Great job, David!



We've been down this road before (humanfont - 1/24/2007 7:38:32 PM)
To quote:

"...These developments came along at a good time for the freedom-loving peoples of the world, as Southeast Asia's rubber plantations were about to fall into the hands of one of the combatants in the next world war. Japan overran much of Southeast Asia and the South Pacific, denying America access to nine-tenths of the world's supply of natural rubber after declaring war on the United States on December 7, 1941.

The United States was not unprepared.

Eighteen months earlier, recognizing rubber as a "strategic and critical material," President Franklin Roosevelt set up the Rubber Reserve Company (RRC) to stockpile rubber, control the production of the raw materials used to make synthetic rubber, control the production of rubber itself and to control the production of anything made from rubber. Standard Oil and four rubber manufacturing concerns - Firestone, B.F. Goodrich, Goodyear and U.S. Rubber - were brought on board to share patents and information as these processes evolved. During the course of the war, they made incremental improvements in the rubber manufacturing process."
...
"The RRC's work would also help synthetic rubber overtake natural rubber in manufacturing. In 1940, only 0.4 percent of the rubber used by U.S. manufacturers was synthetic. By 1950, the use of synthetic rubber in manufacturing had surpassed the use of natural rubber. In 1990, synthetics were used in 70 percent of rubber production."
http://www.ohiodnr.c...

Lets see:
-Strategic War Incentive (check)
-Strategic Petrolium Reserve (check)
-Promising new technologies (check)
-Massive government industrial policy (missing)