Alcohol fuel - The obvious answer, Yes or No?

Discussion in 'Business & Economics' started by Billy T, Nov 18, 2005.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Brazil could displace oil at lower enviromental & dollar cost.

    Just released study (Unicamp University - one of the best in technology) shows that with no clearing of rain forests there are 2.5E8 hectars of reasonbly level land in Brazil with soil, rain, truck access, etc. for mechainical cultivation of sugar cane. Also there is great potential in "enzimatic hydrolysis" for efficiency improvement of the conversion (I do not know what this really is).

    The following is partial extract from Forbes special report, 16 Nov.05 called: "Sugar in the Tank" (Author David Atoms):

    "Brazil is the world's largest producer of sugar and ethanol. Brazilian cars are also equipped with engines that can run on ethanol and gasoline, or any blend of the two. Known as "flex-fuel" cars, they have dazzled the market since their launch by Volkswagen in March 2003. Last month, they captured 66.7% of new car sales. ... Brazil ethanol, or "alcool" as it is called, costs only $2 at the pump, compared to $4 for a gasoline-ethanol blend (Brazil no longer sells regular unblended gasoline). And while ethanol-powered cars consume 25% to 30% more fuel per mile than gasoline cars, the average motorist can save about $820 a year by switching to ethanol. ...

    'Ethanol is typically cheaper than regular gasoline, and we're going to do all that we can to support it," said President Bill Ford in a speech to employees in Dearborn, Mich. Ford has since begun a prime time TV advertising campaign for its ethanol vehicles, noting that it plans to produce 250,000 ethanol vehicles next year, way ahead of its plans to produce 250,000 hybrid cars by 2010.' ...

    U.S. ethanol production is rising dramatically, thanks to generous corn subsidies, (at least $4.5 billion according to the U.S. Department of Agriculture) and tax incentives for fuel distributors. There are currently 93 ethanol plants in the United States, with another 24 under construction. Production is expected to rise to 5 billion gallons by the end of next year. ...

    Few understand how much of their tax dollars go to support the inefficient sugar / alcohol industry in US:
    If US bought alcohol from Brazil (and other tropical producers who have cheap land, labor, 24 month growing season, good rains, etc. No wonder frozen Iowa's corn based Alcohol is several times more expensive to produce.) IT WOULD COST US TAX PAYERS LESS if US simply GAVE CAR FUEL AWAY FOR FREE!!!!! The amount given would need to be limited because if car fuel were free, the consumption would rise and this would no longer be true. Perhaps every US citizen could receive free (transferable for non car owners) coupons for 1000 liters of free alcohol annually and pay lower taxes.

    The US voter is in the pocket of the Iowa corn lobby and too ignorant to know it.(end of Billy T insert)

    Last year the use of ethanol reduced the U.S. trade deficit by $5.1 billion by eliminating the need to import 143 million barrels of oil, according the Renewable Fuels Association, which represents ethanol producers. In recent years, major energy companies weren't interested, leaving the field wide open to smaller entrepreneurs. Ethanol became the salvation for Midwest corn growers struggling to make ends meet with a saturated market and slumping prices. ...

    Sugarcane growers in Florida recently commissioned an ethanol study. Oil industry executives testifying at Senate hearings recently urged that the solution for U.S. energy needs lies in better "access" to new exploration and streamlining refinery permits. To be sure, experts agree that gasoline still has a major role in U.S. energy supply. But with demand and future prices of fossil fuels uncertain, the day of renewable energy may have arrived. ..."
    Last edited by a moderator: Nov 18, 2005
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  3. nirakar ( i ^ i ) Registered Senior Member

    Increased use of Ethanol can reduce the US trade deficit now.

    Ethanol always should have been used in place of MBTE, but the damn oil industry is very powerfull in the USA and preferred MBTE as an oxengenator.

    But oil prices must rise a bit more before Ethanol can compete with gasoline in an open market unaided by taxes on gasoline. The price information on the other thread showed that taxes in Brazil on gasolene explain why ethanol can compete there now. Unless some other technology comes along, ethanol should eventually replace gasoline in the USA, because we know that untaxed gasoline prices will continue to rise and should cost more than ethanol by 2020.
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  5. guthrie paradox generator Registered Senior Member

    Plus ultimately you cant grow enough stuff to produce enough fuel to replace petrol; it is only useful as an additive. And as far as I am aware, the major farming corporations in the USA are getting subsidies to develop it, which isnt exactly free market.
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  7. Roman Banned Banned

    American soils have been depleted for like 50 years or something. The only reason we can get any good yeilds out of them is through massive fertilization. Fertilizer that we synthesize using gasoline.

    It's very inefficient to use the new bio-fuels, as they ultimately require more fossil fuels to produce than enrgy they yeild.
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Can you giv me more specific reference to "the other thread" and the date of the post you are referring to please?

    In US, in Brazil and in all significant producer of alcohol, there are many more production sites than oil refiners. The cost of an efficient small alcohol plant is only very slightly more than a large one per litter of capacity. By locating many closer to the cane, corn, sugar, beets etc. there is great saving in transport to the plant form the growing fields. Thus in all countries, the alcohol is produced by independent producers who tend to compete.

    In Brazil, the oil production and refining is by PetroBras and the government is the major stockholder, appoints the president etc. The political control is strong and used to keep the price of gas low at the domestic pump, especially in ellection years - there is never a price increase then, no matter how much the international price of crude has rissen.

    The small alcohol producers sell the sugar in the cane juice as sugar on the world market, if that is more profitable or as Alcohol if not. They are not under government control and alcohol they sell is not given any tax break to make it competive. Nature did that by giving Brazil cheap land, cheap labor, abundant rain, 12 months growing season. That is why the cost of producting alcohol in Iowa (or France) is several times more expensive than in poor tropical countries and must have both great government support and quotes to keep the cheap alcohol out.

    In short I do not believe your assertions that alcohol in Brazil competes very well with gasoline because of favorable relative tax treatment. If anything it is the other way round when PetroBrass is selling gas domestically at a loss (compenstated, at present, by the high international price of oil).
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    You are too focused on US production. The unicamp study states Brazil alone could supply most of the current oil used, with reduction in green house gases (The cane takes 100% of the carbon it contains from the air and the alcohol burn in the cars etc returns only a small fraction of it to the air. Most passes thru cows and enriches the soil - this also reducing fertilizer demand - a indirect benefit to the environment from switching to alcohol for car fuel.

    Stop thinking must be "made in USA" and climb out of the pockets of the oil industry that wants to permit you only to think of alcohol as an additive to gasoline. Lower your taxes, clean the air, drive at lower cost, with alcohol.
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    You too, like guthrie, are a "thought captive" of the Iowa corn lobby and oil industry. Read my reply to him. No one (except those few receiving enormous gifts of your tax dollars) is suggesting producing alcohol in the USA. Import it at about half the cost of gasoline and reduce the US balance of payments problem.
  11. VossistArts 3MTA3 Registered Senior Member

    Hmm I dont know. Im sure that there are other ways to use petrol gas more efficiently. I was reading on some site I chanced on to the other night that some guy invented a device to vaporize gas and inject it into the motor cylinder in the 30s. the guy posting on it said that guy got about 8 miles in his car that shouldve got 150 mpg before he was stopped and bought off. the old feller posting even gave detailed instructions on how to modify a carborator to make it so a vehicle could run off gas vapor. Sounded hella dangerous to me but, I somehow feel like it could be feasable. certainly there must be a multitude of ways to make a combustion engine run on less gas or be more efficient. certainly. if nothing else, stop making cars weigh 1000s of fucking pounds. what total bullshit that is. your car runs out of gas and youd be hard pressed to push it a block to a station. if you had a flat and no spare you couldnt carry your wheel a 1/2 mile to have it fixed. if your house was furnished with seats like the ones in your auto youd have to hire a college football athelete to help you redecorate. and dont they have a race in australia every year where solar cars race over a 1000 miles or something? why do hybrid cars necessarily have to produce all of their own battery reserves? is it really believable that they couldnt build a battery system for a car that would run it 200 miles per charge and have electric "filling" stations that could fastcharge the batteries just like we do at gas pumps? Im an idiot when it comes to this stuff, but im quite sure no one is really trying all too hard on this one... seriously. they will fuck us and the planet as long as they can for more cash.
  12. nirakar ( i ^ i ) Registered Senior Member

    BillyT you said "I gave the new prices in prior post: R$1.24/l for alcohol, just tonight when I filled up, and R$2.30/l for gas."

    From the other thread: "

    1.24 Brazil Reais = 0.555355 United States Dollars x 4.544 rounds to $2.52 per gallon of ethanol

    2.30 Brazil Reais = 1.03009 United States Dollars x 4.544 rounds to $4.68 per gallon of gasoline.

    Here in California we were bitching and moaning about paying $3 a gallon. Price came back down to about $2.60 a gallon for gasoline.

    One more calculation. With ethanol having less BTUs per gallon you would expect that you would have to burn more more ethanol per kilometer than you have to burn gas per kilometer. Posters on other web sites who may or may not know what they are talking about disagree with each other about whether the ethanol delivers less gas mileage.

    If and BTU is a BTU is a BTU and miles/kilometers per volume is determined by BTUs then the adjusted Brazilian prices for ethanol would be R$1.89 per liter or US $3.84 per gallon. " (End of Quote from other thread)


    My memory was off. The gap between ethanol and gas was less than I thought. So forget 2020 as the year when gasoline is more expensive than ethanol and think more like 2010. Oh but wait. Again I forget, the USA also has large taxes on gasoline. Also the California price of gas has come back to about $2.35 . Also the U.S. refiners are propping up the price for refined gasoline by colluding to restrict refining capacity. If they start loosing market share to ethanol they will change their tactics. Maybe 2020 is the year that ethanol becomes cheaper. Who knows.

    According to my unverified thinking the spot price for crude entering the US market is the same as the spot price for crude entering the Brazilian market. I see no reason to account for the higher price of gasoline in Brazil other than Brazilian taxes unless the Brazilian refiners are colluding to keep prices up even more than the USA refiners are.
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    True that Alcohol gives less MPG than gas. Rule of thumb, here in Brazil is that if alcohol is about 35% lower in price, it is the better bargain.
    All countries put a lot of taxes on fuel. the US much less than most including Brazil, but especially Europe and this is why only US drivers buy the SUV gas hogs. The level of taxes on gas is unimportant relative to the gas vs alcohol question so long as it is related to the energy content and not making a bias in favor of one over the other. In US import quotes, high duties, make alcohol expensive to import and protect the domestic producers. You are transferring billions of you tax dollars to a very few firms (people) for the "benefit" of making it more costly to drive your car! I do not understand How the American voter can be kept so ignorant /poorly informed, but the Iowa corn/ alcohol lobby is one of the most generous and the current US leadership is not only in their pockets, but made up mainly of ex oil CEOs.

    I think this true. Brazil exports more crude than it imports (last year was first time this true) but the crude produced mainly from off shore coastal wells is too thick to supply all domestic gas needs so some is sold and lighter crude is imported. I am not sure of the net economics. PetroBras sells greater volume at lower price than it imports and economically it is probably neutral effect.

    You are wrong (unless speaking of the high cost US produced alcohol) to think that alcohol will only be able to be cheaper than gas in 2020. ALCOHOL IS CHEAPER NOW, but kept out of US to benefit the few at the expense of the many, but what is novel about that?

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    Last edited by a moderator: Nov 19, 2005
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Some quotes from Brian Jennings' article in Forbes called "The Case For Ethanol"
    Be warned he is pro production in US and the executive vice president of the American Coalition for Ethanol,

    While no new oil refineries have been built in the U.S. in nearly three decades, new ethanol-production facilities are coming online at a rate of almost two per month. Today, 92 ethanol plants are operating across the country with a total production capacity of 4 billion gallons of fuel annually. Two dozen more plants are now under construction to provide an additional billion gallons of ethanol.

    An average-sized ethanol plant costs approximately $65 million to build and will employ nearly 40 people. These positions are good-paying, high-skill jobs--chemists, engineers, managers, marketers. The plant’s $56 million in annual operating costs circulates throughout the community many times, benefiting everyone from the farmers who provide the corn to make the fuel ethanol to the local businesses that supply goods and services for the production facility. An ethanol plant will increase tax revenue for local and state governments by at least $1.2 million annually.

    From the perspective of trade, our increasing imports of oil and gas are a costly habit. America’s trade deficit in crude oil has risen from $27 billion in 1987 to $100 billion in 2002. This deficit is the primary culprit in our total trade deficit. Given that each billion dollars in trade deficit costs the U.S. 19,100 jobs, this is a counterintuitive drain on the U.S. economy that must be plugged.

    For every barrel of ethanol that is produced, 1.2 barrels of petroleum are displaced at the refinery. Ethanol won’t replace 100% of the fuel we use, but it is a critically important component in America’s energy-supply portfolio.

    Comment by Billy T on last paragraph above:
    It could, but not it you try to produce it by growing corn in Iowa's ground which is frozen 1/3 of the year, very high cost, and harvested with very expensive labor.
  15. nirakar ( i ^ i ) Registered Senior Member

    The U.S. retail price including taxes by volume of gasoline is cheaper than the Brazilian retail price by volume of ethanol incuding taxes. If Brazilian retail ethanol is heavily taxed then maybe ethanol might br cheaper than gasoline.

    Heavily taxing gasoline, mainly to reduce the trade deficit, but also to reduce pollution, and to conserve crude oil for future generations of global humans is the obvious common sense policy that the USA should have enacted into laws in the 1970s. But, It would be foolish to expect that the SUV driving Americans led by the propaganda and political money of the extremely powerful oil industry, to vote for politicians who will significantly raise taxes on their gasoline. So ethanol has to beat gasoline at the fuel pump prices as it does in Brazil before Americans switch to ethanol.

    Yes the corn growers are a problem.

    US sugar growers are protected from imports. The U.S. candy industry wants to import Brazilian sugar but the US suger growers are a stronger political force that limmits sugar imports. The climate in most of the USA must be wrong for growing sugar. I don't know how sugar compares to tobaco and cotton for return on investment for U.S. Southern farmers.

    If the USA did import ethanol from Brazil then the potential advantage for the US trade deficit from switching to ethanol would be lost.
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    No, Not true at anything near current crude oil prices as Alcohol is cheaper than energy equivalent gasoline. That is part of the reason why Brazil has a trade surplus - it is avoiding much larger imports of oil by driving alcohol powered cars. In Brazil's case the alcohol is produced in Brazil, so US driving alcohol powered cars wound only reduce the US trade balance problem, not solve it entirely. Roughly by $400 per year per car driven on alcohol instead of gasoline.
  17. nirakar ( i ^ i ) Registered Senior Member

    Measured either by BTUs or by volume, the retail price you gave for ethanol in Brazil is higher than the current retail price of gasoline in the USA.

    If the world price of crude went up and the USA replaced crude imported from the Middle East with Ethanol imported from Brazil the US trade deficit would continue. In the future when ethanol becomes cheaper than gasoline in the USA,the US might want to produce the ethanol domestically to reduce trade deficit, even if the Brazilian ethanol was cheaper than US made ethanol.

    If irrational foreign investments were not making a mess and the damn currencies and rose and fell as you would expect them to if the balance of trade drove the currency exchange movements, then David Ricardo's "law of comparative advantage" would be working and free trade would be the best economic policy for all nations, and not bying the Brazilian ethanol if it was cheaper than domesteic ethanol would be unthinkable stupidity.

    I wish the Chinese would stop buying US bonds now. Let us have our global economic crisis now and get it over with so that Adam Smith's "invisable hand" of the markets can one again be an invisable hand that guides us wisely to where we should be going instead of being an invisable hand that pushes us into oncoming trafic.
    Last edited: Nov 21, 2005
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I tend to agree with all of the above.

    I want only to note the two main reasons why tropical alcohol, even in the producing country, cost more gas in USA at the pump (after taxes):
    (1)Because many foreigners do accept dollars, the value of the dollar is falsely high - your reference to Ricardo & Smith's arguments and the huge US trade deficit is not producing the fall they predict. Thus, oil is imported cheaply when priced in dollars, but that is about to change with Euro be coming part of a basket for pricing crude in the near future.

    Alcohol can not be cheaply imported with these same over-valued dollars as the Iowa corn lobby makes sure it can survive with quotas, high import taxes etc. They, with the Ex-oil company CEOs of the current US government, want US to "guzzel oil" as US gas additive is their only market for alcohol. - they can not export it to countries that can buy at less than half their cost. Your taxes are higher so you can pay more to dirve !!! How ignorant can the US voter be ???

    (2)Compared to rest of the world, US taxes gasoline very low. This short sighted policy, not only makes US the main consummer of oil, but is very bad for US. For example, GM just announced that it will cut 30,000 more US jobs as the SUV etc it has been selling are losing ground to smaller cars. The average car here in Brazil holds 4 passengers in good confort, but is much smaller that those regular (non-SUV) cars. Your analysis only looked ta the total price of gas vs alcohol. To do it correctly, you must look at each component of the cost at the pump. If you increased the US price of gas so that the price at the pump contained the same % of taxes, then the total price of gas would be higher than Brazilian alcohol is in Brazil.

    For example: Assume country B produces 12 apples at 1.00 $US and country U produces 12 at &1.50. Country B applies 300% taxes making the total cost of 12 apples $4.00 and Country U taxes only at 100% so there the total cost is only $3.00. Looking at the total cost (as you did) one concludes that apples are cheaper to produce in country U !!! - What nonsense !!! It is the short signted US tax policy, different from that which all other countries wisely follow, that lead you to the false conclusion you reached.

    Drive your USVs until GM goes out of busness, and the dollar is nearly worthless. - Then prehaps you will understand how foolish low taxes on gas were, but I doubt it. I expect that, rather than admit that the US brought about its own collapse, it will blame others.
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I also want to offer my reason as to why China keeps accepting Dollars, buying US bonds etc. - They know that they can not defeat US in a military contest. - Both would be losers if it comes to a nuclear ICBM exchange.

    They now (or soon will) have the power to destroy US economically at any time of their choosing. I doubt they will do this, but they will be in a position to demand the US conform to their wishes, especially about Taiwan.
  20. guthrie paradox generator Registered Senior Member

    I'm in the UK. Presumably you have figures which show that Brazil can produce megatonnes of ethanol from sugar cane, sufficient in fact to feed both UK, USA and Brazilian petrol needs?
  21. Baron Max Registered Senior Member

    At what cost? And isn't that one of more important issues? If it's too costly, then it can't really be considered a solution to the future oil shortages.

    Baron Max
  22. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    I do not have, nor have I read a copy of the recent UniCamp university study. The following with some explanatory comments added by me for non Brazilians came from a newspaper article on the report. It is my summary of the newspaper article:

    Just released study (Unicamp University - one of the best in technology) shows that with no clearing of rain forests there are 2.5E8 hectars of reasonably level land in Brazil with soil, rain, truck access, etc. for mechanical cultivation of sugar cane. Also there is great potential in "enzymatic hydrolysis" for efficiency improvement of the conversion (I do not know what this really is).

    Brazil is not the only tropical country that can supply alcohol more cheaply than gasoline. Of course none of it will happen while the markets are closed to protect domestic producers in US and Europe, but it obviously economic foolishness to be producing sugar beets in the frozen ground of France, Germany and the six other European countries who just forced an new delay of three years more the start of the agreed 39% reduction in EU's import duties. England also produces sugar, from beets behind a protective tariff wall for the benefit of the few at the expense of the many in the form of higher cost food, fuel and taxes.

    What part of the facts that tropical countries, with cheap land and cheap labor and 12 month growing seasons can produce alcohol at a fraction of the cost of Iowa, or Germany or England or France etc. do you doubt?
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Unfortunately the cost of production of alcohol currently has little to do with where it comes from or how much is produced.

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