Xcelplus International, Inc. (XLPI)

[puppman]

Sticking Up For Ethanol
Ethanol's critics have been busy disparaging ethanol for taking more energy to produce than it creates. I listen to a lot of talk radio through the day and night, and I got fed up hearing the same old misrepresentations.
I did a little searching on the Internet, and it seems that a publication authored by David Pimental of Cornell University in the 1990s was the source of material used by the ethanol critics. I read Pimental's, report and it didn't take long to see that Pimental's statistics were either pessimistic or just plain wrong.
By the numbers
For example, Pimental uses 120 bushels of corn per acre as an average yield. The U.S. average is over 140 bushels per acre. He also uses a yield of 2.5 gallons of ethanol per bushel. MGP, the ethanol plant at Lakota, Iowa, is getting 2.9 gallons of ethanol per bushel.
Pimental uses his figures to show that there are 300 gallons of ethanol produced from an acre of corn by multiplying 120 bushels per acre times 2.5 gallons per bushel. Using the national average of 140 bushels per acre times MGP's 2.9 gallons per bushel gives an actual yield of 406 gallons per acre. Here in northern Iowa, corn yields of 160 bushels per acre are common and at 2.9 gallons per bushel shows a yield of 464 gallons per acre, a sizable difference from Pimental's 300 gallons per acre.
Pimental states that for each gallon of ethanol there is 160 gallons of waste water. Iowa Ethanol is in its second year of production and is located across the road from me. It produces just over 50 million gallons of ethanol annually. That's 137,000 gallons per day. According to Pimental's figure of 160 gallons of wastewater per gallon of ethanol, that's 21,920,000 gallons of waste water per day.
That's a discharge rate of 913,333 gallons per hour. Iowa Ethanol's production is nearly a closed system with very little waste water. It is not any where close to the 160 gallons of waste water per gallon of ethanol that David Pimental claims.
If Pimental is figuring total wastewater for all processes leading up to ethanol production, and maybe the ethanol plant uses half of Pimental's 160 gallons of wastewater, that's still one inch on 406 acres everyday or a discharge rate of 456,667 gallons per hour. I can't see that discharge rate from here.
Pimental's data showed that a gallon of ethanol containing 76,000 BTUs requires 129,600 BTUs to produce it for an energy loss of 71%. USDA research using current data shows a net energy gain of 24% in measuring BTUs produced against BTUs consumed.
An important point overlooked by Pimental is that ethanol production uses abundant U.S. resources of natural gas and coal as ethanol plants use these domestic energy sources to create a product that replaces imported oil. The USDA's Agricultural Economic Report Number 721 dated July 1995 states that each gallon of ethanol produced domestically will displace 7 gallons of imported oil.
Against corn
Pimental criticizes the amount of land needed to grow corn, that "corn is one of the major row crops responsible for soil erosion in the United States," and that "corn production is the largest user of insecticides and herbicides." Pimental continues his criticism with problems concerning pesticide drift, contamination, and the expense of monitoring these problems. Not only is David Pimental against ethanol, he is against corn production.
Pimental resorts to an insult to me and all corn growers implying that corn should be used for food and not ethanol. His implication is that each bushel of corn used for ethanol is a bushel not available to a hungry person. This is nothing more than fear mongering.
If the hungry people of the world want my corn, they can pay 5 cents a bushel more than the ethanol plant, and I will get them all the corn they want. Last winter they could have bought all the corn they wanted around here for $1.80 a bushel. Even today, bins and elevators have many, many bushels of corn looking for a new owner. There is no supply problem, and harvest is coming.
Suspected subsidies
Before reaching his conclusion, David Pimental writes about subsidies and uses a GAO report that analyzed tax costs and federal farm program expenditures with projected ethanol production. In a final proof that neither he nor the GAO knows anything about economics and the farm program, he cites the 1990 GAO report that says increasing ethanol production would greatly increase tax subsidy expenditures, but the GAO didn't know by how much.
Increased ethanol production actually raises the price of corn, thereby reducing the amount paid by the USDA to corn growers. It's another example of an old report using old data that is still being used by ethanol detractors to make their point.
The host of one of my talk shows originates his show in St Paul, Minnesota. He has been critical of ethanol saying, "Why should I subsidize a corn farmer?" After hearing this several times, I couldn't take it anymore and sent him a message by e-mail citing some of the above facts.
Minnesota has ethanol in all its gasoline, while in Iowa we can buy a 10% ethanol blend or unblended. The ethanol blend sells for 10 cents a gallon less than the unblended. In my message to him I said, "It appears to me that I, a corn farmer, am subsidizing you with lower gas prices."
The market price of ethanol fluctuates around $1.50 per gallon, so any ethanol blend would lower the price of gas. An 85% blend of ethanol called E-85 is available in some areas and shows promise in keeping gas prices from increasing.
I also told the host I would be happy to answer any questions he had on corn production or on ethanol. I'm a corn grower and an ethanol investor. To his credit, he read my entire e-mail over the radio, and I haven't heard any criticism about ethanol since. I concluded my e-mail with, "There is no substitute for the facts."

http://www.igpc.ca/sticking.html
Published in 2005