"Difficulties of replacing oil with biofuel"

Over the past year I have written several articles warning us that ethanol is not the answer to our dependence on imported crude. Furthermore, I pointed out that farmers shifting crops to participate in growing corn for Ethanol to meet the presidents National Energy Policy Act with a goal to reduce consumption of oil by 20 percent [by 2020] will have a domino effect at the grocery store. We have all seen the increase in cost of basic food staples such as milk, bread, eggs, chicken, pork and beef. Peasants living in third world countries are having a difficult time as they try to feed their families such as the increase in tortillas, a major staple in Mexico.
The following report is from the British Royal Society. I found it on the Arab newspaper Al-Hayat.

“Difficulties of replacing oil with bio-fuel”

Walid Khadduri Al-Hayat – 06/04/08//

In a recently published study, the British Royal Society said that bio-fuel, ethanol, may play a role in combating pollution but may at the same time lead to environmental imbalances if not dealt with carefully. The study indicates that experiments currently conducted in Britain and the European Union do not provide sufficient guarantees to improve the environment as a result of using this type of fuel. The report called for additional research on this alternative energy source before it is produced and used on a wide scale in the future. It also encouraged the British government to offer financial incentives to support research centers in their efforts to improve all aspects associated with the production of bio-fuel, especially on the environmental level. According to Professor John Pickett who chaired the study, “bio-fuel can play an important role in cutting greenhouse gases from transport in Britain and the whole world. However, a disaster will ensue if it is used on a wide-scale as a result of the negative effects on variant natural patterns.” He also added, “We should not add new environmental or social problems to our world in our attempt to deal with climatic change.”
The British study came out at a time when bio-fuel enjoys full support from all American presidential candidates without exceptions. The American department of agriculture recently anticipated a rise in the prices of corn. Its March 31 report took the markets by surprise when it anticipated a continuous future rise in prices as a result of the decline in the areas allocated for growing corn.

Given these forecasts, ethanol prices have witnessed a hike as the price of corn bushel (25kgs) reached almost six dollars in the Chicago commodities market against $3.744 just a year earlier. Every one dollar increase in the price of corn is equivalent to an increase of $0.25 in the cost of ethanol production. Currently, four billion gallons (one gallon equals 3.78 liters) of ethanol are produced from corn and another two billion from sugarcane. While significant, these quantities cannot replace the global consumption of oil which stands at 87 million barrels of crude oil daily. Bio-fuel is produced either from corn, sugarcane or soybean, with ongoing attempts to produce it from coconuts.

It is worth mentioning that the share of renewable energy alternatives (solar, nuclear, bio-fuel, and wind) constitutes no more than 5% of the global energy basket currently in use, and it is unlikely to increase significantly in the coming two decades. Hydrocarbons which include crude oil, natural gas and coal constitute over two thirds of the current energy basket with no expected changes in these rates in the foreseeable future. The rates, however, vary across nations as the case is in France for example which has for years been relying on nuclear energy as the primary means of producing electricity.

Bio-fuel has attracted the attention of observers recently as a result of the priority it received from the American administration in its attempt to find alternative local sources of energy to end its dependence on imported oil, especially from the Middle East. Laws were enacted to accelerate and expand the usage of bio-fuel in the United States. The federal aid and financial support has encouraged farmers to grow corn and benefit from financial aid on the one hand, and created new marketing opportunities on the other hand. This policy has led to new problems that were not substantially considered by the British Royal Society report. Most noticeable among these problems it that many American farmers have resorted to growing corn instead of wheat and barley which has in turn reduced the areas allocated for these crops and led to the global rise in the prices of feed and consequently meats and bread, not to mention the prices in other pastas.

Bio-fuel has been produced on a significant and commercial level in Brazil since the mid-1970s following the first hike in oil prices in 1973. At first, bio-fuel was produced from sugarcane with no impact on other agricultural crops because of the availability of vast areas for growing sugarcane. Moreover, Brazil did not export bio-fuel or its associated technology. Consequently, bio-fuel produced in Brazil was restricted to that country and was used as a fuel for Brazilian cars operating in Brazil alone. Throughout this period, the effects of bio-fuel were restricted to Brazil until corn was used to produce ethanol in the United States and more recently in Europe. Currently, however, the situation is different with the global availability of ethanol production technology and the expanding production of crops used for its production.

In contrast to other renewable fuels, bio-fuel can be easily used to replace gasoline or diesel and is characterized by the relatively lower cost needed for replacing the infrastructure at gas stations. However, as the case is with other energy alternatives, problems associated with the production of bio-fuel are surfacing. The first of these problems is its effects on the global prices of bread and meat. Some of these prices have doubled over the past year, not only because of the production of ethanol, but also because of the improving standards of living in crowded Asian countries such as China and India. With rising incomes in these countries, food choices have also changed witnessing a rapid increase in the consumption of bread and meat. The emergence of these two factors simultaneously has led to a rapid and significantly increase in global prices. The second problem lies in the environmental effects resulting from the use of ethanol as noted by the British study. The third problem is characterized by the significant financial support provided by the governments in question, first to research centers and then to farmers to support this industry, along with the economic effects on the price of bio-fuel once governmental aid is ceased in the future.

*Energy Expert”

Gilbert comments. did you see where the New York State legislature rejected Mayor Michael Bloomberg’s request to charge an $8 congestion fee to drive into midtown Manhattan? Perhaps you have read about a huge fee for those driving into the city of London. London Mayor Ken Livingstone would like to increase their current $16 congestion fee to $50 for gas guzzling SUV’s. What is missing in these plans is the impact on the business community. In London sales at retail chains dropped 22 percent. Their Independent stores took a bigger hit once this congestion fee went into effect where their sales dropped 53 percent.

Folks. It’s called cause and effect. At a time when many are struggling to pay their bills, and pay through the nose at the pump, we have our elected officials working overtime t
o drive us out of our cars with social engineering such as the proposed public/private $42 billion bullet train from the Bay Area to San Diego that most working families will never ride.

Let me close by continuing to argue for drilling in a small area within ANWR while we still can fill our tanks for less than $75. “Snooze you lose” is one of my favorite expressions. At best, because of reduced mileage, Ethanol is a wash in terms of driving distance and import reductions. Tapping ANWR would send a message to the OPEC’rs that we will not continue to run our nation’s economy with both hands tied behind our back.

Folks. Last year we were amazed at all of the Chinese people we saw driving cars. To drive in Shanghai you need to enter a very costly lottery system to get plates for your cars. The days of the Rickshaw are only found in history books. Yes, many still ride old rusty bicycles but they have 2 million kilometers of roads and new tollroads, some of which we drove on last April. As such demand for “black gold” will never be as low as we have become accustomed to in past decades.

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