Why We Need U.S. Produced Ethanol (Part 1)

Energy Policy

Currently a "War on Ethanol" is being conducted primarily by Tea Party Republicans to "Get big government out of America's gas tanks". Examples include: U.S. Rep. Goodlatte (R-Va.) to completely eliminate the National Renewable Fuel Standard, and State Representative Matt Gaetz (R) to eliminate ~10% ethanol blending with gasoline in Florida. Recently, a FOX TV station in Orlando reported that they asked people on the street, and found very little support for ethanol use in Florida.

Really, nobody can make a lucid argument anymore why U.S. produced ethanol is important? Are Fox News and Rush Limbaugh types right that its all about the Green, Global Warming Agenda by Obama to create a New World Order of Socialism? Are ethanol requirements all about Big Government trying to take away personal liberties? Is it about Government intervention into "Free Market Capitalism" to pick winners and losers?

Lets see if we can help out a little. Does anyone vaguely remember something that happened on 9/11/2001, where 15 of the 19 Terrorists were from (and funded by) Saudi Arabia? Anyone?, Anyone?

How about Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad who are in a strategic anti-American alliance with the economic objective to create instability resulting in high oil prices. As Chavez said in a recent speech in Iran -- "If the U.S. empire succeeds in consolidating its dominance, then humankind has no future. Therefore, we have to save humankind and put an end to the U.S. empire".

What is so disconcerting is just how quickly America has lost focus on why National (enacted in 2005) and Florida (enacted in 2008) Renewable Fuel Standards were originally initiated in the first place. Current news headlines of Iran threatening to block oil shipments through through the Strait of Hormuz and the civil unrest in Nigeria should be a wake up call.

One must wonder how Tea Party types would have responded to a question of whether the U.S. should continue trade with Germany and Japan (funding their economies for their war effort) during World War II.

Funding Terrorism Through Our Gas Purchases Isn't Supporting U.S. Troops.	In presenting why U.S. ethanol production is important, maybe the arguments just have not been entertaining as much as say, Rush Limbaugh. For those who need to be entertained, does the Jon Stewart (Daily Show) clip help on why oil purchases from places like Venezuela and Saudi Arabia is not in America's best interest?

Cold Hard Facts: We used to say "You're entitled to your own opinion, but not to your own facts". Listening to Conservative Media, one would conclude that U.S. ethanol policies (only enacted in 2005) have been an abysmal failure.

Let's spend a moment to look into some of the numbers of foreign oil imports and U.S. ethanol production. According to the U.S. Department of Energy (DOE), in 2010 the U.S. imported about 63% of its crude oil requirements (the type of oil used to produce gasoline). Also according to the DOE, combined oil imports from Saudi Arabia and Venezuela would represent the single largest source of U.S. imported oil.

Again using U.S. Department of Energy information, the below chart compares the gasoline equivalent of U.S. produced ethanol to gasoline produced from Saudi Arabia, Nigeria, and Venezuela oil imports. Although many Republicans would disagree, the below chart sure looks encouraging as to efforts in developing domestic resources.

A common rebuttal to the above chart from Conservative Media and Republican Tea Party types is that "no one can PROVE that U.S. ethanol production reduces foreign oil imports from un-friendly places like Saudi Arabia or Venezuela". It is because of this common rebuttal that the above chart compares only the FACTS of current gasoline production.

Since oil is a world-wide commodity with extremely complex international pricing dynamics, no one can authoritatively state what any one specific event would result in. For example, using this Conservative "Think Tank" logic, one could also state that "no one can PROVE increased U.S. oil production would decrease oil imports from Saudi Arabia, Nigeria, or Venezuela". Maybe increased U.S. oil production would only decrease oil imports from friendly countries like Canada or Mexico. Also, no one can PROVE that building the Keystone project (high price oil from costly tar sands extraction) will result in lower oil imports from Saudi Arabia, Nigeria, or Venezuela.

Its time to stop playing silly ideological games and get to work in seriously developing all domestic energy resources for transportation fuels -- including oil, natural gas, and ethanol/bio-diesel.

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Cost Per Acre for Sweet Sorghum Establishment in Central Florida for Ethanol Feedstock.

Agriculture

Equipment, Labor, O&M Costs:	Cost Per Acre: (initial establishment)	Cost Per Acre: (on-going operations)
Site Prep (Mowing, Disking, Dozer)	$90.00	$22.50
Spraying Herbicide	$13.50	$13.50
Fertilizer Application	$6.00	$6.00
Planting of Seed	$22.50	$22.50
Sub-Total	$132.00	$64.50
Materials Costs:
Fertilizer	$92.00	$92.00
Herbicide	$4.85	$4.85
Seed	$16.66	$16.66
Sub-Total	$113.51	$113.51
Total Base Cost (sum of above)	$245.51	$178.01
Contingencies @15%	$36.82	$26.70
Total Estimated Cost	$282.33	$204.71

An information search on commercial field production cost of planting sweet sorghum for ethanol indicates that our above cost estimate of $178.01 per acre is comparable to other cost estimates which are in the range of ~$150 per acre.

The continued production goal of Homeland Agricultural Fuels at the Bartow Ethanol facility (a nameplate capacity of 5.4 million gallons per year) is to produce ~600 gallons of ethanol per acre from sorghum (in line with what is currently achieved in Brazil using sugarcane).

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Outrage!!! (over less than a penny a gallon?)

Oil Use

In the continuing Red State versus Blue State Ideology Battles, yet another "flashpoint" has erupted over President Obama's proposal to eliminate $4 billion annually in tax deductions for oil companies. From the N.Y. Times, outrage why these tax benefits should continue given record earnings by Oil Companies. And from the Wall St. Journal, their outrage over even considering eliminating oil tax benefits.
After hours of debate and bills introduced in Congress and the countless hours of media "Talking Heads" vilifying either Obama or Corporations and Republicans as the Anti-Christ of Satan -- this topic must be pretty important -- Right?


While we are no fancy Ivy League Economist, we thought maybe we are smart enough to do some "simple math" (with the help of Google, of course). As we understand it, most of these tax benefits are allowable deductions to taxable income (like how us common folk claim a tax deduction for interest on our home loans).

According to the Wall St. Journal article, the effective tax rate for major Oil Companies in 2009 was about 25%. So the $4 billion in allowable expenses, reduced their tax bill about $1 billion (i.e., $4 billion times a 25% tax rate).

Using the wonderfulness of Google, we see that the U.S. uses about 140 billion gallons of gasoline every year. So, spreading $1 billion in taxes over the gas we use equals less than 1 cent per gallon ($1 billion divided by 140 billion gallons).

The toxic ideological talk coming from both Democrats and Republicans is just plain silly -- as keeping or eliminating the Oil Companies' tax benefits will not have any measurable change in gas prices.

Another example of how oil prices are used for political gain is how data is "cherry-picked" by members of Congress and the Media to serve one's ideology. Recently, we saw a graph on how oil prices have increased under the Obama administration -- with the objective to blame Obama's policies for high gas prices. The problem with this presentation was it was neither "fair nor balanced". The below chart is much better in objectively showing oil prices under three Administrations of Clinton, Bush (where record prices occurred), and Obama.

As we have repeatedly said over the years, our oil dependency problem is not a Red State versus Blue State issue, its an American problem that deserves much better effort than our elected members of Congress give us. America can not simply "Drill, Baby, Drill" our way out of this problem.

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What Exactly Is America's Energy Problem?

Energy Policy

With gas prices moving to $4 a gallon at the pump, we are again reminded of the words of the beloved Yogi Berra -- "This is like Deja Vu all over again". So after +30 years, why has it been so difficult to develop a National Energy Plan? A major reason is the diversions used by so many competing Ideological, Political, and Corporate Interests to create a fog of confusion to the American Public.

In this battle over public opinion, just a few simple facts could go a long way in at least identifying what America's real energy problem is -- our oil dependency with transportation:

We do not have an overall "energy crisis". We have an oil dependency problem Only 1% of U.S. oil consumption is used to generate electricity ~72% of U.S. oil consumption is for transportation fuels (primarily cars)

U.S. Energy Sources and End Uses
Since only ~1% of our total oil use is for electricity, the U.S. is already "Energy Independent" from foreign oil for power generation. For transportation, the story is totally different as oil provides ~94% of fuel source requirements, where about 50% comes from foreign oil. The overwhelming majority of oil use is for cars and light trucks, with truck freight hauling and air transportation the other two most significant uses.
The Diversion of Global Warming: So if America doesn't use much oil for electricity, why does the energy policy debate (and failed bills in Congress) focus so heavily on electricity generation from wind, solar, and nuclear power?

By looking at the above FACTS, the American Public can see that what has been framed as an "Energy Crisis", is really two distinct issues -- (1) Oil dependency for transportation, and (2) Global Warming/Climate Change through the use of fossil fuels. By combining these two issues in framing the national energy policy debate, public opinion confusion occurs resulting in a "Status-Quo" by:

Blurring Policy initiatives between electricity generation (not causing our oil problem) and fueling transportation (which is our oil problem). Unnecessarily drawing transportation policy initiatives to reduce oil use into the Global Warming controversy

Even if we put a solar panel on every roof, a wind turbine on every street corner, a new nuclear power plant in every State, and made every building energy efficient (e.g., insulation, light bulbs) -- there would be no real change in our oil dependence. These electricity policy initiatives are to either reduce CO2 and other greenhouse gas emissions, or to advance Special Interests (especially nuclear power).

Conversely, transportation policy initiatives targeted to the three primary uses of oil would be a huge step toward "Oil Independence":

Cars -- Increased Auto MPG, Ethanol, Urban Mass Transit, Electric Vehicles. Freight Hauling -- Creating a natural gas infrastructure for heavy truck hauling. Reducing Air Transportation -- High Speed Rail between major urban areas.

Making Global Warming a focal point in the national energy debate creates a diversion of negative public opinion reactions from increased taxes (carbon tax), even more federal EPA regulation, to destroying the economy and job losses (especially to China). According to a recent national Rasmussen Poll only 33% of Americans believe that Global Warming is man-made from increased levels of greenhouse gases.

But even if Global Warming is the greatest scientific hoax ever created, America still needs to develop alternative sources, uses, and greater energy efficiencies to reduce our transportation dependency problem with oil. We can not simply "Drill, Baby, Drill" our way out of this problem. Americans consume 25 percent of the world's produced oil, but our nation holds less than 3 percent of the world's proven oil reserves.

The Diversion of "Drill, Baby, Drill": To achieve the commonly used "Oil Independence" catchphrase only through drilling, the U.S. would need to develop and sustain new sources of oil production currently equal to Saudi Arabia. Is this possible? According to Energy Information Agency information, Saudi Arabia has oil reserves 14 times greater than the U.S.In addition, an inconvenient truth that "Drill, Baby, Drill" Supporters fail to ever discuss is price. Oil is an internationally priced commodity. No oil company would ever sell oil from U.S. resources less than world market prices. Another fact never discussed is that any dramatic increase in U.S. oil production above proven reserves would require developing non-conventional resources (using some very questionable environmental practices like fracking). The reason that tar sands and shale deposits are not widely used is their very high extraction costs, making these resources economically viable only when oil prices are high. So while increasing domestic oil production in an environmentally safe way will have many benefits, reducing prices at the gas pump will not be one of them.

The Diversion that Government Shouldn't Choose Energy Winners and Losers: This often heard statement argues that a national energy policy should be based on free market capitalism, not big-government centralized control of providing incentives to "specific" technologies. However, in "Walking the Talk" this principle is only applied to renewable/alternative energy. A recent example of this hypocrisy is Republican members of Congress introducing legislation to keep federal loan guarantees for nuclear power but to eliminate the same guarantees for renewable energy projects. Federal Government intervention into free market capitalism for energy has occurred for decades, including:

Price-Anderson Nuclear Industries Indemnity Act: As the World has seen recently in Japan, nuclear accidents can be catastrophic with an economic toll in the hundreds of billion of dollars. In order to remove this economic impediment to stimulate nuclear power in the U.S., Congress enacted the Price-Anderson Act that currently limits the individual liability of a nuclear plant's owner to $300 million.

Oil Pollution Act: In the 1990 OPA, Congress limited an oil company's liability to pay for damages to fishermen, property owners and other individuals and businesses, governments (via lost tax revenue) and natural resources to $75 million per incident.

Oil and Natural Gas Federal Subsidies: The total amount of federal subsidies for fossil fuels is difficult to quantify. However, President Obama has proposed eliminating $4 billion a year in more than a half-dozen tax exemptions for oil companies. The tax breaks have a long history -- the so-called percentage depletion allowance for wells dates back to the 1920's.

Where Do We Go From Here?: America's Energy Policy shouldn't be a Red State versus Blue State issue -- it must be an American issue. From our viewpoint, a national energy policy is being held hostage by two major factions: (1) A Democratic Party overly driven by Environmental Ideology -- especially Climate Change, and (2) A Republican Party driven too much by Corporation Special Interests. Hopefully, the American Public will start to see through the myriad of diversions and demand real change, including:

Environmentally Safe Drilling: After the BP Gulf spill, is the solution really just the need for more Government oversight and regulation? We agree with Ron Paul that the answer isn't more regulation. Its just letting the market work by eliminating the $75 million liability cap from the Oil Pollution Act.

"When a business's liability is limited by law, then they make riskier decisions than full liability would allow. For instance, in this case, BP opted for single wall oil pipe casing, as double-wall was "too expensive." Of course, if full liability is incurred, then the definition of what is "too expensive" changes dramatically." -- Rep. Ron Paul.

It's Transportation, Stupid!: If 72% of America's oil use is for transportation (where about half comes from foreign oil), why are we talking about anything other than transportation in a national energy policy debate? Policy initiatives promoting "Energy Independence" through electricity generation is a Red Herring diversion for two reasons: (1) Electricity generation is not causing our oil dependency problem (only 1% of oil is used for electric power); (2) The argument for "electrification" is putting the cart (electricity supply) before the horse (electricity demand). Only after energy demand initiatives (e.g., electric vehicles, high speed rail, etc.) that will achieve significant fuel switching from oil to electricity should new power plants be on the table for discussion.

In solving America's oil problem of course we need to develop new oil resources in an environmentally conscious way. But we also need more, much more by developing alternative sources (ethanol), uses (electric cars), and greater energy efficiencies (increased car mileage).

Without an intense focus on transportation, America really doesn't have a Plan and as Yogi also said, "If you don't know where you are going, you will end up somewhere else."

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Increasing Awareness and Usage of Alternative Fuel & Energy Sources

This site exists to showcase Alabama renewable energy projects and to provide you with alternative energy information so that you can lower your expenses on fuel and ultimately help decrease our country's dependency on foreign oil.

For a more detailed demonstration view our three part biodiesel presentation.

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Core American Values and Oil Use

Oil Use

The N.Y. Times has an insightful story of how Renewable Energy and Energy Efficiency is gaining a solid foothold in Kansas, even through 52% of Kansans are highly skeptical on the science of Climate Change/Global Warming (and downright dislike Al Gore types and Big Government actions to regulate greenhouse gases). In America's very politically conservative Heartland, progress is apparently being made by addressing energy issues in terms of "Core American Values" like patriotism, ethics, saving money, spiritual convictions, economic development and job creation at local levels -- but just don't bring up the divisive subject of Global Warming.

In a N.Y. Times article on training returning Iraq and Afghanistan War Veterans to become farmers (which can include growing energy crops for biofuels like ethanol), we especially liked the quote of an ex-Marine: "It's a national security issue. The more responsibly we use water and energy, the greater it is for our country."

The below chart reflects the top 5 importers of crude into the U.S., 9 years after we were attacked on 9/11. Clearly, historical and current events in Saudi Arabia, Venezuela, and Nigeria don't reflect America's "Core Values".
One place where "Core Values" should especially be discussed is in Florida. According to U.S. Department of Energy data, Florida uses ~41% of the total oil consumed in the mainland U.S. to generate electricity. This is no one-year fluke, but has been going on for decades in Florida.

So, the next time you fill up your tank with gas or especially in Florida, flip on a light switch -- just think about where your dollars are going.

Supporting Terrorism Isn't an American Core Value.	Oil dependence is among the most dangerous threats to U.S. national security. For years, senior military and intelligence officials have warned that too much of U.S. oil payments eventually trickle down to terrorists, who use it to buy the weapons used against our troops in Afghanistan and Iraq.

Bribery Isn't an American Core Value. Nigerian authorities recently made an out of court settlement on criminal bribery charges against Halliburton and former CEO Dick Cheney. The Settlement is the latest fallout of a U.S. federal court conviction of Halliburton and its subsidiary of a bribery scheme in Nigeria -- with a record $579 million fine.

Hurting our Economy Isn't an American Core Value.

Environmental Destruction Isn't an American Core Value. While the BP oil spill in the Gulf of Mexico made world headlines in 2010 -- this type of destruction has been going on in Nigeria for decades. Look at some of these pictures. The issue isn't about some liberal, latte sipping Treehuggers wanting to protect "Mother Earth" -- its about things like clean drinking water for innocent children.

Killing Christians an Isn't an American Core Value.
Especially at Christmas, news stories of Christians being murdered in the Middle East and Africa were horrifying. But this isn't anything new in places like oil rich Nigeria or Iraq. Americans and especially American Christians need to understand the Islamic law which governments in the Middle East impose -- where converting to Christianity or any Christian missionary conversion efforts are punishable by death (e.g., Saudi Arabia, Afghanistan)

Radical Religion Isn't an American Core Value. All Americans understand the tragedy when Religion is hijacked in the Middle East to achieve a political agenda. But what about when this occurs in the U.S.? In the current Green Dragon Campaign Environmentalism is being demonized as the work of Satan to a target audience of conservative Christians. But, you're not going to believe where a major source of funding is coming from to pay for this campaign -- its gulp, Exxon/Mobil.

A New Mind-set
In thinking and talking about Energy, Americans (and especially our politicians) need to have a new mind-set. We need to move away from the pure Red State/Blue State, Conservative versus Liberal Ideologies, and always include "Core Values" in a civil national discussion which includes all resources of energy from "Drill, Baby, Drill", Renewable Energy, Natural Gas, Nuclear, and Coal.

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