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    Ethanol

    The Details of Ethanol



    LADDONIA - Ethanol. It's one of the most common topics. Even with all the attention, ethanol's origins and effects are still commonly misunderstood.

    Ethanol seems to be one of those words people throw around, but don't fully grasp. We've heard everything: It's good for the environment; it's bad for the environment; it hurts your car; it helps your car; you save money; you lose money.

    Come Jan. 1, it will be an even bigger topic of conversation. The state's E-10 Mandate will go into effect. That means most gasoline - depending on its octane level - will contain 10 percent ethanol. But that won't change things as much as you might think.

    "I daresay most of my members are using E-10, and you don't know it. And that's because ethanol is fairly cheap right now," said Ron Leone, Executive Director of Missouri Petroleum Marketers Association.

    Eight states in the country have an E-10 Mandate; Missouri will be the fourth to implement it.

    But, Missouri is the only state with a price trigger in the mandate, put in to protect consumers.

    "The fuel retailers - only have to sell E-10, 10 percent ethanol only when the price is the same or lower than the price of what we call unblended fuel," explained Leone.

    One of Missouri's newest ethanol plants is the Poet Biorefining Plant in Laddonia.

    "We grind about 50 thousand corn bushels a day, and we make about 150 thousand gallons of ethanol a day. Everyday," said Robin Venn, General Manager of Poet Biorefining,

    "So, the ethanol process starts with corn. We grind that up into a flour. Mix it with recycled waters in the process, and we end up with what we call a beer. The beer is then run through distillation columns, and we end up with 190 proof coming out of there. We run it through a molecular sieve to pull out the rest of the water, and we get 200 proof," explained Amy Vanberschot, Technical Manager at Poet Biorefining.

    It's pretty potent, so the plant mixes it with a little gas to poison it. Therefore, no one can use it for anything but fuel.

    Last year, the Laddonia plant turned a profit. This year, they're still in the black, but not by as much.

    "Just about anybody can do the math and say you can't make a lot of money when ethanol is at a buck fifty, and corn is at 3.50 a bushel," said Venn.

    The big debate with ethanol surrounds E-85, that's 85 percent ethanol blended with 15 percent unleaded gasoline. The price for E-85 is cheaper, but drivers do see a loss in gas mileage. Something not typically seen with E-10. Some care; some think it evens out.

    "The price I pay for it makes up for it. It's cheaper. It's better on the environment. I don't know, I just like it. Seems like it runs better on it. I get a little bit less," explained Scott Wallenmeyer, a Jefferson City driver.

    On Oct. 19, E-85 cost $2.15; 50 cents cheaper than regular gas. But the corn growers association says that's not low enough.

    "That's getting closer to where we think it ought to be. Today, honestly, there should be between 80 and 85 price differential between E-85 and what it's actually selling for," explained Gary Marshall, Chief Executive Officer of Missouri Corn Growers Association.

    Ethanol is relatively cheap to make. It costs about $1.56 to make a gallon of ethanol. But blenders get a 51 cent tax credit per gallon. So the finished product costs $1.05 a gallon.

    "That's not what the consumers are paying. So somewhere between the ethanol plant and the gas pump, someone is making a lot of money. And, I don't know who it is," said Marshall. He says everyone along the supply chain - aside from the ethanol plants - is making some extra profit. From the blenders and major oil companies to advertising, Marshall says they're all increasing prices and making money because they can and no one's stopping them.

    The corn growers hope the lower the price goes, the more profitable it will be for drivers to use E-85. But there's a speed bump on the way to that goal - lower gas mileage.

    "E-85 has about a 20 to 30 percent decrease in your miles per gallon, which means you're filling up more often. Which is why many of my members are pricing it lower than fossil fuels because you're going to be purchasing it more," explained Leone.

    Some believe the environmental benefits of E-85 supersede the lost gas mileage.

    "It reduces greenhouse gas emissions by 35 percent compared to gasoline. That's a benefit everybody can buy into there," said Ethan Taylor, E-85 Coordinator from the Missouri Corn Growers Association.

    But not everyone can buy every type of ethanol-based fuel. The only cars that can handle E-85 are flexible fuel vehicles - cars that can run on blended and unblended gasoline. And most of us don't drive those yet. Even if more people eventually do buy flex-fuel vehicles, they may have trouble filling up with E-85.

    "The thing with E-85 today is we are starting to get more cars but we don't have enough distribution sites," said Marshall.

    There are only 85 E-85 stations in the state. In mid-Missouri, there are eight in Columbia and five in Jefferson City. Now that we're seeing a big push for ethanol in Missouri, what is the ultimate goal?

    "Our goal is 15 billion gallons of ethanol from 15 billion bushels of corn by the year 2015," said Marshall. He says that would account for about 10 percent of the nation's energy usage.

    "Everybody understands it reduces our dependence on foreign oil, it helps clean up the air, its a great market for farmers, but in the end consumers want a really good deal. And, we believe if E-85 is priced the way we think it will in the future, it's gonna be a great deal for consumers," said Marshall.

    Reported by: Megan Murphy
    Edited by: Kathryn Lucchesi


    Published: Tuesday, November 20, 2007 at 9:06 PM
    Last Updated: Wednesday, November 21, 2007 at 12:54 AM

    #2
    Had an interesting conversation with someone in the fuel supply business yesterday. His comments were that someone who last year predicted $100.a barrel oil for the current time frame is now predicting the possibility of $200.00 a barrel within the next year or two. Also commented that old refining capacity and high costs of building new capacity in Alberta is putting pressure on supplying enough product for the market place. These possible implications will likely have an impact on ethanol.

    Comment


      #3
      Does anyone have any idea what new programs the maltsters and the CWB have discussed? What is the CWB proposing for both barley producers and the malting industry? What were the results of last week's CWB board of director meeting?

      Comment


        #4
        1. Cash prices for malt barley.
        2. Producers contracting directly with maltsters (but with CWB involvement).
        Profits made by the CWB would go into the pool account. Classic open market subsidization of the pools.

        Maybe others but this is what was rumoured as being discussed.

        Nothing too exciting - just another Led Zeppelin - The Song Remains the Same.

        Comment


          #5
          Chaffmeister,

          How Quaint!

          Now that the CWB has contracted the majority of the 'Easy Pickings' in malt barley supply... they (the Maltsters) turn on the monopoly... and offer to pick up the rest!

          Free export Licenses would supply competitors of theirs... that would not be fair... they want the barley 'Cheap' and the CWB got the vast majority of it to them.

          The CWB monopoly is all about protecting the profits/positions of the commercial trade... and giving any risk to grain growers... the CWB can get away with handing off without a major revolution!

          That is what the CWB monopoly has been about since it was instituted in 1993 by "Goodale" Adam Smith!

          Comment


            #6
            Tom, Tom, Tom – Have I taught you nothing?

            The issue is not one of "cheap" barley.

            The maltsters get it. They really do. The CWB system is dysfunctional. Impotent. As ***** as a three dollar bill. They want to be able to contract for next year already – they want to be able to deal directly with farmers – to get the appropriate price signals out to farmers and maybe even use futures to manage risk – but the CWB gets in the way. CWB sales contracts aren't really ales contracts - at best they're "pricing arrangements". CWB PPO contracts suck and CWB price signals suck even more. How about a basis contract on malt barley? No – I mean a real one, not a CWB smoke-n-mirrors variety.

            “Easy pickings”? You’re kidding, right? Nothin’s been easy in the malt business this year.

            “Free export licenses” is not a threat to the domestics. With an open market China would actually pay market prices. What a concept!

            You say “they want the barley “Cheap” – I think they just want assurances they'll get the barley they bought. Period. “Cheap” means absolutely nothing if the barley doesn’t come up the driveway.

            Tom, I thought you were all behind developing relationships with endusers. Well, here’s your chance. Here you have an attractive “suitor” trying to get an overprotective “parent” to step aside so that they can woo you directly in the interests of a long-term relationship – and you think all they want to do is get into your pants.

            Comment


              #7
              To the original post, has anyone looked at the needed changes to the CWB act? Is it minor amendments similar to cosmetic surgery or is it a major change to the act with all the complications that are likely to occur?

              Comment


                #8
                chaff, After all this time, and all the sweet talking, knowitall about everything under the sun. It turns out, you are simply a dirty old guy, wit nothing else to do but, try and seduce us to the dark side. Shame on you ol man. Malt smalt, simply halt, and we'll all be better off. Ritz is a politico, he knows little or nothing about gag, and is probably scared to try and legislate something, he knows nothing about!

                Comment


                  #9
                  Chaff...aka Fransico, et. al.

                  Since you are Angri-ville's self-declared grammer cop, please explain to all of us what an "ales contract" is supposed to be?


                  By the way, I thought that you were in agreement with the malsters, that you wanted barley prices and other feed prices in general to come down in value?

                  After all, I thought you said you were losing $50/pig, and that feed grains were artificially inflated due to government subsidies into bio-fuels.

                  "Asta la vista, agricultor de cerdo de olor"

                  Comment


                    #10
                    Chaffmeister,

                    You wrote: "Nothing too exciting - just another Led Zeppelin - The Song Remains the Same."

                    What was the song last summer fall (06)... and the summer before (05)... and on and back...

                    Tick talk, Trick Tock... for how many years... 95, 96... 07... The mice run up the clock...

                    Could it be the CWB has been finally told NOT to sell out the farmers grain early for this year (08)!

                    The commercial 'industry' has demanded it both ways for so long... my head is spinning!

                    Obviously the sweet talk is not working this year!

                    I heard so many left wingers say ... August 1 07 is too early... give us 1 more year.... THEN

                    Trick Talk; Trick Talk... Chairman Ritter on August 1 07 makes the big promise... covers it with chocolate... and now decides to bury us under a flurry of spent mushroom compost!

                    Please show me how the malties have earned one ounce of trust in grower relationship ... over the past year Chaffmeister!

                    It IS all about the MONEY.

                    First time shame on them... second time shame on us!

                    Lets have some decent production contracts... $6/bu prices... and I will start to believe...- maybe -... they are (for once) thinking a little about a fair shake for "Designated Area" barley growers!

                    Comment


                      #11
                      Tom:

                      The reference to “The Song Remains the Same” was aimed at the CWB – not the maltsters.

                      You say “The commercial 'industry' has demanded it both ways for so long... my head is spinning!”

                      Last spring, you would've liked the maltsters to support the feds on an open market. They had serious issues with open contracts and looked for remedies – and that pissed you off. Now, they’re throwing their support 100% behind the open market – “complete deregulation” is the term they use – and you’re still pissed off. But isn’t this what you’ve been waiting for?

                      You say “Please show me how the malties have earned one ounce of trust in grower relationship ... over the past year!”

                      Tell me what they’ve had to work with. Under the CWB’s thumb, what can they do to develop a grower “relationship”?

                      You say “Lets have some decent production contracts... $6/bu prices... and I will start to believe...- maybe -... they are (for once) thinking a little about a fair shake for "Designated Area" barley growers!”

                      But Tom, isn’t that exactly what they’re saying they want as well?

                      You’re right - It IS all about the MONEY. (But note I said it wasn’t about PRICE. There’s a significant difference.)

                      Comment

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