Archive for August, 2010

One financial writer opines that high oil prices help alternative energy

(from the article “High prices will fix what politicians cannot”

By Trevor Houser, published by Financial Times. Full article can be found at: http://www.ft.com/cms/s/0/d0cc7bbc-9d97-11df-a37c-00144feab49a.html )

 …There is also little hope that new (oil) supply will bring much (consumer price) relief. OPEC countries control an increasing share of global reserves and are not inclined to increase production just to give consumers a break. With most new onshore resources in politically unstable countries, the International Energy Agency predicts that over the next two decades the lion’s share of new non-OPEC production will occur offshore, much of it in deep water. The real lesson of the Gulf spill is that drilling the deep Macondo well reflected the reality that there are few cheap and easy options elsewhere.

The only silver lining on a painful future for consumers is that expensive oil is just what is needed finally to kick-start the petroleum detox. The fact that high oil prices survived the crisis excises the ghosts of the 1980s, and gives entrepreneurs and investors confidence to support cleaner vehicles and develop alternative fuels. Nearly all of the world’s largest vehicle manufacturers now plan plug-in hybrid or fully electric vehicles within two years, with General Motors rolling out the Chevy Volt last week. At $20 per barrel, powering the Volt with electricity costs more than filling a comparable car with gasoline. But at $80, Volt drivers save enough on fuel to offset the vehicle’s high price. Faced with expensive oil, the chemicals industry is turning to natural gas, increasingly abundant thanks to the shale gas boom, and venture capitalists are betting on advanced biofuels.

Make no mistake, clean-energy deployment driven by a tight oil market will be slower, more limited, and less pleasant in the absence of good policy from Washington. And as oil accounts for only a quarter of global greenhouse gas emissions, high prices will do little to address climate change compared with the cap and trade proposals Congress put on hold. But today’s oil markets make public investment in clean-energy research and development, just now returning to 1970s levels, more palatable – and a change in America’s relationship with petroleum seems possible at last.

The writer is a fellow at the Peterson Institute for International Economics

 Our Take: 
We don’t call it cheap, though biofuels increase supply and therefore blunt high gasoline prices. And we don’t call it easy. The oath to ethanol and biodiesel development has been fraught with pitfalls for its pioneers. But ethanol is an alternative to offshore drilling. One that exists today. One that works well in complement to technologies like the Chevy Volt, which, though it is an electric vehicle, still depends on liquid fuel to extend its range beyond commuting distance. That liquid fuel can be an ethanol blend.

 Congress members of all stripes should realize that a forward-looking energy policy that really gets behind biofuels expansion can help all states—red, blue, (and even purple, as some people call states like Minnesota that seem to split party-loyalty right up the middle). It’s time to reach across the aisle and make it happen.

Oil spill dumped 4.9 million barrels into Gulf of Mexico, latest measure shows

By Joel Achenbach and David A. Fahrenthold
Washington Post Staff Writer

 The blown-out well in the Gulf of Mexico gushed 12 times faster than the government and BP estimated in the early weeks of the crisis and has spilled a whopping 4.9 million barrels, or 205.8 million gallons, according to a more detailed analysis announced recently.

 BP’s Macondo well spewed 62,000 barrels of oil a day initially, and as the reservoir gradually depleted itself, the flow eased to 53,000 barrels a day until the well was finally capped and sealed July 15, according to scientists in the Flow Rate Technical Group, supervised by the U.S. Geological Survey and the U.S. Department of Energy.

 The new numbers once again have nudged upward the statistical scale of the disaster. If correct — the government allows for a margin of error of 10 percent — the flow rate would make this spill significantly larger than the Ixtoc I blowout of 1979, which polluted the southern Gulf of Mexico with 138 million gallons over the course of 10 months. That had been the largest unintentional oil spill in history, surpassed only by the intentional spills in 1991 during the Persian Gulf War.

 The new flow rate figures came as engineers made final preparations for a “static kill” operation that might plug the well permanently even before a relief well intercepts Macondo at its base. BP announced that the procedure would be delayed because of a leak in the hydraulic control system on the well’s new cap.

 ….In all, about 1.2 million barrels of oil have been accounted for, either burned, captured or skimmed off the ocean’s surface. That’s about a quarter of the new estimate for the total spill.

 Where the other three-quarters has gone is unclear. Some has evaporated; some has been consumed by microbes; but scientists remain troubled by the possibility that large amounts of oil remain underwater in cloudlike plumes.

 “This further confirms that a lot of the oil is still at sea. And we just don’t know the implications of it,” said Ron Kendall, director of the Institute of Environmental and Human Health at Texas Tech University. Kendall will testify before Congress on Wednesday about his fears that dispersant chemicals have helped much of this oil sink into deep-sea habitats.

 Find the full article at:

www.washingtonpost.com/wpdyn/content/article/2010/08/02/AR2010080204695.html?hpid=topnews  

Our Take:
BP and the Coast Guard didn’t get it all. And even counting what’s washed up on shore, there’s still a lot of oil unaccounted for. Some experts believe, there may be vast plumes of oil, floating like clouds in the depths of the gulf, and settling in deep sea marine habitats. The spring into summer timing of the spill ensures that the disaster has had the highest impact possible on the reproductive cycle of all the crustaceans, fish, birds and marine mammals that call the Gulf home.

It is reported that Gulf fisherman wouldn’t feed fish caught now to their own families and don’t believe they should sell it to the general public.

 All we have to say is that a comprehensive federal energy policy that support of biofuels development, electric vehicles and alternative generation of stationary power would replace every drop of oil that ever would have come from the Macondo well and any other proposed or currently operating offshore oil well.

 Now, instead of a fully developed alternative energy industry, we have had enough oil to fill 210 olympic swimming pools dumped into a sensitive ecological environment, perhaps changing it forever, but certainly disrupting it for generations. Simply put, farm-based renewable energy would never have that kind of environmental cost. Ethanol and biodiesel produced from farm commodities are part of a larger picture of environmentally-responsible energy production.

Ag conference builds bridges

Written by Jonathan Eisenthal

In this era marked by greater and greater partisanship, the Minnesota Ag Leadership Conference brought together representatives from across the breadth of commercial agriculture—from cotton growers to livestock processors to corn and soybean growers.

“We put together this conference because we saw the need to build bridges among all the different producers and industries out there,” said DeVonna Zeug, a farmer in Walnut Grover, Minnesota, and president of Minnesota Corn Growers Association.

“This was a unique opportunity for agricultural leaders to forge relationships and discover common ground,” said Jerry Ploehn, a farmer in Alpha, Minnesota, and chairman of Minnesota Corn Research & Promotion Council.

The success of this initial effort may result in the establishment of an annual or bi-annual gathering to foster and deepen this cooperative spirit among the variety of farm groups.

From policy wonks, to top elected officials—federal and Minnesota government representatives made appearances, in order to hear from farmers and to share their perceptions of the current situation in Washington.  Representatives Collin Peterson and Tim Walz attended, as did U.S. Undersecretary of Agriculture Jim Miller, who oversees the Farm Services Administration. 

Senators Blanche Lincoln (Senate Agriculture chairman), Saxby Chambliss (ranking Republican on the Senate Agriculture Committee), and Al Franken (D-MN, and a member of the Senate Ag Committee) all offered messages by teleconference. Senator Franken was represented at the conference by aide Charlie Poster. Senator Amy Klobuchar (also on Senate Ag) sent senior aide, Dave Frederickson, to speak and observe on the senator’s behalf.  Representative Frank Lucas (Texas), the ranking Republican on the House Agriculture committee addressed the group by teleconference.

Staff from Combest Sell and Associates assisted MCGA staff in facilitating this meeting of agricultural leaders.

Peterson, the current House Agriculture Committee Chairman, presented a number of ideas that amounted to a battle strategy for agriculture to succeed against some very strong forces arrayed in opposition to it. He advocated creating and passing the next Farm Bill in 2011, a full year before the current farm bill lapses, in order to assure the current level of funding.

Peterson warned that the farm-based energy industries are at a critical juncture. For farm-based energy to survive it must get a message out from the farm sector to the general public, that America needs to get national energy policy back on track. Renewable energy could supply up to a third of our motor fuel and provide a critical component in a larger plan to shrug off the chains of our Middle East oil connection. He said environmental extremists are intent on derailing farm-based energy, regardless of the damage to the economy, national security or any of the other areas where farm-based energy provides a significant benefit.

The ag chairman made proposals that offered food for thought—for instance the idea that the farm program ought to reconfigure the direct payment made to farm operators (one of the provisions that has become increasingly difficult to maintain politically) into other structures that might strengthen the safety net or the farm economy as a whole. For instance, making crop insurance more affordable. Likewise, he said the support for an ethanol blender’s credit could be rebuilt by linking it to getting an E85 pump installed in every gas station, and increasing the number of flex fuel vehicles and models offered to US consumers.

The chairman’s most controversial statement came in his briefing on the situation of animal agriculture and its opponents, both outside and within the federal government.

“We should cut EPA’s funding in half,” Peterson offered in his typical no-nonsense style, to the murmured approval of the crowd.  Peterson described EPA as a bureaucracy that is out of control, ready to pull apart livestock agriculture in the name of its extreme, political and unscientific approach to water regulation. He said a draconian cut to its budget would reduce its staff and therefore limit the agency’s ability to create ever more unsupportable regulation.

Rep. Tim Walz observed that Washington politics had gone beyond partisanship to a state he liked to “Balkanization”—smaller and smaller fractions practicing a bitter and divisive form of politics. This is true not only inside the Beltway, but in the increasing divide between rural and urban people, he said.

“We need to come together—that’s how we get good policy that broadly benefits the nation,” said Walz.

He noted that he has lived in rural Minnesota for many years, but he also had the opportunity to live in the Pearl River delta, in the city of Shanghai, China—one of the strongest regional economies in the world. From these different experiences he has arrived that the opinion that urban people in America need to recognize the general good that proceeds from investing in rural infrastructure, whether its road and bridge upgrades or broadband internet connections. By strengthening the rural economy, urban residents will strengthen the economy as a whole and see a benefit to themselves as well, he said.

“China spends 9 percent of its gross domestic product on infrastructure and America spends one percent,” Walz reported.

Livestock agriculture faces dire threats from the well-funded lobbying groups like Humane Society of the United States. Both Walz and Peterson noted that HSUS is operating under cover of a general impression that it supports local animal shelters, when in fact more than 98 percent of its $100 million annual budget is devoted to a campaign to end the consumption of meat. Both representatives said HSUS should own up to its real agenda, and debate it openly in public and allow the democratic process to work the way it should.

But private groups aren’t the only ones with animal agriculture in their crosshairs.

Michael Formica, Counsel for National Pork Producers, and Josh Winegarner, director of government relations for Texas Cattle Feeders Association, shared their impression that the EPA’s current work-up of the 509 regulations of the Clean Water Act (Total Maximum Daily Loadings of a variety of chemicals and compounds), and their focus on the Chesapeake Bay watershed was going to severely  impact the poultry industry in Maryland and the dairy industry in Eastern Pennsylvania, among other facets of animal agriculture practiced in the Chesapeake Bay watershed. They agreed that EPA officials’ intent was to develop the model in Chesapeake Bay, and once fully deployed, to replicate the model in the Upper Mississippi watershed—to the detriment of all farmers in the Midwest.

“Building Bridges” was the theme of the conference, and it was far from being a “gloom and doom” symposium. The conference, held over three days in Brainerd, Minnesota, at the north woods lakeside resort, Madden’s on Gull Lake, offered lots of opportunities for these leaders to follow up the information presentations in the informal setting of group meals, golf and boat outings, and socializing at the Madden’s Pub and over shared meals.

“I really hope it leads to shared messages on more topics, because it seems like more recently there have been too many different, conflicting messages coming out of ag,” said Elizabeth Hamilton, advocacy and strategic partnerships director for Minnesota Corn Growers Association. She said, “I hope this leads to shared comments and highlights some areas where we can be more effective that way. By sheer force of coming together and hearing these presentations, all these folks end up talking about issues that they haven’t talked about, with people they assumed felt differently from themselves. We know we won’t agree on every issue, but the ability to work together on common issues despite that will be critical to everyone’s success, ultimately.”

Farm Families of the Year 2010, Jeff and Julie More: The Be Your-Own-Boss, family togetherness lifestyle

 When asked her favorite thing about the farming life, 11-year-old Jodi More didn’t hesitate, “You get to get out and do whatever you want and you are your own boss.”

 So, when Grandpa Alvis drives up to the house in the spring and says, “Let’s go out and pick up rocks!” Jodi finds herself experiencing more and more enthusiasm for these mundane chores that all add up to the well-run farm operation that three generations of her family actively take part in. Jodi, her two brothers and two sisters represent the fourth generation working the place in Mapleton, near Mankato, where the Mores raise Hereford cattle, corn and soybeans. And a little wheat for the straw, to feed the cattle.

 Julie echoes her daughters comment: “My husband and I both love the freedom (of farming), the big accomplishment, being your own boss. There is a lot of pride that goes into it. It is what you can build for yourself, what you can do, how far you have come since you started—you can see it everyday when you look out the window at the fields or walk into the shop.”

 Jodi has had four role models among her siblings, and right now, her older sister Jessica, provides a great example of total enthusiasm for the More family operation. At 17, Jessica is going into her senior year at St. Clair High School.

 “She’s Jeff’s right hand man helping with moving grain trucks, cleaning the bins, baling. She’s a jack of all trades,” said Julie. “She’d like to go into school to be a vet assistant.”

 Asked what he loves about farming, Jeff talks about what it means to be a family responsible for the care of animals and the raising of crops.

 “Just like any farm family, we’re always working together, doing chores, putting in crops, hauling the grain,” said Jeff. “We work together, eat together. You are pretty close to your family because you depend on each other for so much.”

 Both of Julie and Jeff’s sons have become trained diesel mechanics, which comes in very handy during planting and harvesting. Justin, 20, just finished John Deere Tech School in Calmar, Iowa, and has a job with John Deere implement in Truman, and Josh, 22, works at Arnold Implement in North Mankato.

 Jeff and Julie’s oldest, Jennifer, is a nurse working at Mason City Hospital, in Mason City, Iowa. Recently married, she and her husband pitch in on the farm when they come home.

 Asked what might surprise the average non-farmer about farming, Julie said that she doesn’t believe people appreciate either the amount of work or the amount of investment of time and money that’s tied up in a well-run farm.

 “The machinery, the seed cost, the chemicals—people don’t really understand what is invested in the grain and raising the cattle,” Julie said.

“One piece of machinery costs $150,000 dollars. We have to borrow that and hope the crop is good. Some of this corn might cost $200 dollars a bag. Even the crop insurance—it isn’t different from taking out insurance on your home—people may not realize we have to take that out on top of everything else. There’s the liability in case accidents happen to other people on our land. They don’t realize all this extra. It’s a big eye opener for a lot of people—the cost for putting everything in and taking it out.”

 Despite the uncertainties and the steep investment, Jeff and Julie and their five kids wouldn’t trade the farming life for any other. They are one of 73 families that were honored on August 5 at FarmFest, as a University of Minnesota Extension Service Farm Family of the Year for 2010. They have been chosen to represent the farmers of Blue Earth County. We are also proud that they represent the membership of Minnesota Corn Growers Association, a 6,000-member grassroots commodity organization.

Wash. Post spreads more horse hockey about ethanol, but RFA won’t let ’em get away with it.

(The op-ed piece from the Washington Post, “It’s time to end the excessive subsidies for corn ethanol”)

 WHEN WASHINGTON starts handing out cash, it can be hard to stop. See, for example, the decades of subsidies the government has showered on the corn ethanol industry. The fuel was supposed to free America from its dependence on foreign oil and produce fewer carbon emissions in the process. It’s doing some of the former and little of the latter. But corn ethanol certainly doesn’t need the level of taxpayer support it’s been getting. Lawmakers are considering whether to renew these expensive subsidies; they shouldn’t. The July 24 editorial “Cornucopia” failed to provide readers with needed context about biofuels, misled them about the nature of U.S. ethanol production and offered no alternative for reducing America’s addiction to oil….

Our Take:
We’d like to give Mr. Dineen a personal high-five, fist-bump combination, and encourage every other passionate supporter of ethanol to make sure they don’t let erroneous information about ethanol go unanswered. Here’s what RFA President Bob Dineen wrote in response, published as a letter to the editor on July 29:

 First, calling for an end to tax credits for ethanol while ignoring the billions of dollars of tax subsidies for Big Oil is as inequitable as it is shortsighted. Lawmakers want more renewable energy technologies, but they require these industries to come hat in hand to Congress for investment. The oil industry, by comparison, lobbies only when the permanent subsidies it enjoys are threatened.

 Second, American ethanol is a success story. Only lamenting the value of the tax credit for ethanol without discussing the economic benefits of ethanol production is misleading. Federal tax revenue generated by the production and use of ethanol totaled more than $8 billion in 2009, $3 billion more than the value of the tax credit. Jobs and economic opportunity in hundreds of rural communities further add to the value of the investment.

 Third, the editorial suggested that there are better technologies available without providing any evidence. There is no gasoline-alternative technology that can match ethanol’s availability, production volume or oil displacement benefit. Moreover, continued investment in ethanol is required to ensure that promising next-generation biofuel technologies, such as cellulosic ethanol, are commercialized. Ending investment in ethanol will result in more oil consumption and severely curtail investments in new renewable fuel technologies.

 Bob Dinneen, Washington

Japanese Biotech regulatory group gets firsthand look at the bounty and healthfulness of GM corn production on Minnesota farm

 Written by Jonathan Eisenthal

 “We need to be as efficient and consistent with our yields as we can, and get the most out of the land that we have and that’s really where it’s at,” said corn farmer Dan Erickson, who farms together with his dad, Chuck –their combines land under cultivation adds up to 1,500 acres near Alden, Minnesota. Erickson said, “Using these biotech products helps us to do that.”

 Erickson, who is also a regional representative of local corn growers groups to Minnesota Corn Growers Association, hosted a delegation of Japanese agriculture officials who are focused on the regulation of which biotech products can enter the Japanese market. The tour was part of a weeklong informational visit to the Midwest, arranged by the US Grains Council.

 Dan and his wife Jenny showed the group of ten officials around the farm, had them ride in the combine, and then he demonstrated the practical difference between corn varieties with genetic enhancements and base varieties.

 “We dug up some roots on some triple –stack and smart stack varieties we use, and then some base genetic corn, which is done as refuge for the pests,” said Erickson. “We showed them the difference. There was root feeding on the refuge corn. We talked about how insecticide is the other option and that’s not necessarily as safe for us to handle.”

 The Ericksons began using biotech corn varieties as soon as they were available, and grow them to the maximum allowable proportion—80 percent stacked trait varieties, and 20 percent base genetic corn—configured in stands throughout the operation to assure that pests will migrate to the refuges and allow the biotech corn to maximize its yield. They utilize anti-corn-borer, and corn-rootworm and increased drought tolerance traits.

 Dan and Jenny are custom heifer growers for a large local dairy, and so feed 450 cattle with silage and grain raised right on their operation.

 “I give them a lot of credit for coming out to see a farm in person,” said Erickson. “As regulators of the industry, this was the first real farm they had been too, and I think we were able to make a favorable impression—I’d really like to get feedback, say by email, to really know what they took away from it. From my point of view, it was really important to show them how biotech fits into the whole cycle of things.  They saw Jenny and me and our three kids and that we are happy and healthy, working on a farm that produces GM crops and drinking milk and eating meat raised using biotech-based feed.”

 As part of showing how biotech fits into the full circle, Erickson invited Rick Mummert, the general manager of the POET-Glenville Energy plant, a farmer-owned ethanol coop that the Ericksons are investor-members of, and Mummert showed the Japanese delegates the three feed coproducts the Glenville produces—distillers grains, bran and a pelletized feed product.”

 “They crowded around Rick and really wanted to see what he had to show them,” said Erickson. “Several of them said, “How sweet!” reacting to the pleasing aroma of the feed products.

World’s great warmup

A new report from the government’s National Oceanic and Atmospheric Administration, using data from around the world, says the past decade has been the warmest on record.

 By BRIAN K. SULLIVAN, Bloomberg News

 Scientific evidence that the world is getting warmer is “unmistakable,” according to a report by the National Oceanic and Atmospheric Administration drawing on research from 48 countries, including Russia and China.

 The past decade was the warmest on record and it’s been getting hotter over the past 50 years, the researchers said, citing 10 main indicators, including surface and ocean temperatures, the amount of sea ice and glaciers and levels of humidity.

 “The records come from many institutions worldwide,” Jane Lubchenco, NOAA administrator and undersecretary of commerce for oceans and atmosphere, said in a statement. “These independently produced lines of evidence all point to the same conclusion: Our planet is warming.”

 Globally, air temperature near the surface in the past 10 years was 1 degree Fahrenheit warmer than the 1960s and about four-tenths of a degree warmer than the 1990s, according to the report.

 The warming has led to shrinking glaciers, more heat waves and heavier rainfall as moisture in the atmosphere increases, the researchers said.

 “The temperature [change] of one degree Fahrenheit over the past 50 years may seem small, but it has already altered our planet,” said Deke Arndt, co-editor of the report, called “State of the Climate in 2009.” “And there is now evidence that over 90 percent of warming over the past 50 years has gone into our oceans.”

 Full story at:

http://www.startribune.com/nation/99513914.html?elr=KArks:DCiUMEaPc:UiacyKUUr

Our Take:
We are not alarmists, and we acknowledge the skepticism about global warming. Typically, these ‘end of the world’ bulletins take it for granted that a warmer atmosphere on earth is all downside, no benefit.

 Be that as it may, we argue for prudence. It makes sense to alter our actions and limit the release of carbon and carbon equivalents into the air, to minimize the changes taking place in the chemical composition of our atmosphere–if we can do so without massive economic dislocation. It appears that grain-based biofuels, building into a broader biomass-based energy and industrial refining and fabrication to replace petrochemical industries (think bioplastics, bio-fibers, solvents and other chemical compounds)–this is a solution that can grow our economy and grow the number of stable, high-paying jobs. Biofuels and biorefinery development, of all the scenarios for limiting greenhouse gases, would cause the least disruption to the industries that will bear the most burden due from the changes we will see.

 Not only that, but using biofuels in our vehicles and increasingly for stationary power generation is carbon neutral, releasing far fewer net tons of carbon into the air.

 Scientists will be debating the meaning and the effect of the one-degree Fahrenheit temperature increase, and the warmer ocean temperatures for some time to come. It is common sense to put the brakes on if we can. But it’s also common sense not to slam on the brakes–then we all just get our heads knocked on the windshield. Biofuels and biorefining are one element to a transition from petroleum hydrocarbons into farm and forest-based carbohydrates.