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Hybrid Vehicles Hybrid Vehicles - Archived Discussions Will ethanol E85 catch on in the US? Will we Live Green and Go Yellow? 
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Will Ethanol plants continue to make money if costs go up? The Blade, Toledo, Ohio - May 22, 2006 The country's fascination with ways to curb oil imports has ethanol-producing plants springing up throughout the country. The corn-fed refineries making fuel for cars and pickup trucks are expected to be quite profitable this year and next, but after that, they may not be money machines, experts said. Some plants bring in a 30 percent return on investment, and others are in the lower double digits, experts said. But some have much more modest profits. The ventures can be risky. With hefty investments of $80 million for a 50 million-gallon-a-year plant to $140 million for twice that size, recouping investment takes more than a couple of years. Success depends on location, corn prices, ethanol prices, fuel prices, and other factors, they say. Jeff Ehlert, president of Great Lakes Ethanol LLC, which is building a 50 million-gallon plant near Blissfield, Mich., said his plant's profit projections are rising now as higher gasoline prices prompt demand for more ethanol and gasoline suppliers use ethanol to replace a harmful fuel additive called MTBE. But Mr. Ehlert fears that profits will "be bouncing all around" over the long term. "It should be real good for the next few years, but after that we don't think it will be as good," he said. Thomas Byrne, head of Byrne & Co. Ltd., of Preston, Minn., which has helped develop more than 30 ethanol plants, said "the thing to remember is it's a commodity-based industry. Sometimes it's going to be good, sometimes it will be bad." Of nearly 100 plants operating in the United States, most were built to turn profits when the price of ethanol delivered to a terminal market, such as Chicago, hits $1.30 to $1.35 a gallon, Mr. Byrne said. A year ago, ethanol terminal prices were down to a $1 to a $1.20 a gallon, and some plants lost money, he said. But with ethanol prices at the terminal hovering between $2.70 and $2.90, some plants now are swimming in profits. And Mr. Byrne said he's bullish on ethanol and bets that prices will never go down to $1.20 again. "The plants right now are very profitable if managed right and in the right location," he said. Mr. Byrne said those high profits are based on plentiful low-priced corn, which has been the case the last several years. But the price of corn has been working its way up. And natural gas, an ethanol plant's second-largest expense, also is getting more expensive. Over the long term, those two factors could cut profitability, he said. Feed corn is a critical fuel source, so a plant typically can have an annual purchase expense of $70 million or more. If a corn shortage sends prices up quickly and ethanol prices drop, perhaps because of lower gasoline prices, what looked to be a sure profit can drop, Mr. Byrne said. "The problem is, your bottom line can change by $100 million pretty quickly either way, and that's pretty significant." But for now, profits are high. "If you have a 50 million-gallon plant and ethanol hits $2.30, you've made $50 million. Your returns now are very, very good," Mr. Byrne said. A typical 50 million-gallon plant stands to make additional millions. Distillers' dried grain - the byproduct from distilling the starch from corn during the ethanol process - can fetch $12 million to $13 million. Cattle farmers buy the product. Carbon dioxide, another byproduct, is worth about $2 million to bottlers and dry-ice makers, Mr. Byrne said. A plant's payroll and maintenance total less than $2 million annually. Alex Samardzich, chief executive of Ace Ethanol LLC, which runs a 40 million-gallon plant at Stanley, Wis., said local agricultural issues greatly affect a plant's profits. "Sometimes there's too much corn, sometimes not enough. What you'll find is with profitability, it ranges across the board," he said. |
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Replying to: fireball1 (Jun 15, 2006 3:38 pm) I filled up today here in Cedar Rapids, Iowa at $2.69 a gallon for E10 89 Octane. 87 octane gasoline was $2.79. Just think of it as kicking the oil cartel dictators in the rump! Drivers don't neeed to be "won over." |
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Replying to: seniorjose (Jun 15, 2006 3:09 pm) I really was not preaching to you, it was to the church of Zero Emissions. Coal is not horrible compared to years back. To some it is bad news. To anyone that thinks a car should be PZEV or banned it is a disaster to use coal for anything other than a Christmas stocking. You probably don't care if they use bunker oil to fire the furnaces of the ethanol stills. I would be surprised if this does not put all the out of business bootleggers back to work. |
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Replying to: fireball1 (Jun 15, 2006 3:33 pm) Clean coal technology has been around since the 1960s -- if you build the scrubbers in like almost all regulations state. I watched the local (New Jersey) Owens Corning plant shift from no scrubbers in 1964. From being a terrible "smokestack" industry, it was turned into a very good neighbor with no particles in the air. the difference is dramatic and since it is an old technolgy by now, it can work. The coal smokestacks that belch like the steel plants of turn-of-the-century Pittsburg steel mills is long gone into history. |
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Replying to: fireball1 (Jun 15, 2006 3:38 pm) There is a lot of opinion and passion in this thread..that is good. I guess as long as we move from foreign oil dependence and being held over the barrel by oil companies that is good. I hope we put out many alternative fuels and break the cycle. Competition, in general, is great for the consumer.
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American Coalition for Ethanol Releases Results of Fuel Economy Study Sioux Falls, SD (August 24, 2005) – The American Coalition for Ethanol (ACE) today released the results of its recent Fuel Economy Study, a pilot study that researched the fuel economy, cost per mile, and driveability of various blends of fuel, including unleaded gasoline, E10, E20, and E30. “As ethanol production and use continues to expand from coast to coast, increased public discussion and media attention have often turned to a debate over ethanol's fuel efficiency,” said Ron Lamberty, ACE Vice President / Market Development. “Because there was very little scientific information out there, ACE commissioned a pilot study to determine whether there are variances in gas mileage between ethanol blends and gasoline.” The research tested unleaded gasoline, a 10% ethanol blend (E10), a 20% ethanol blend (E20), and a 30% ethanol blend (E30) in three late-model vehicles. The Chevrolet Impala, Ford Taurus, and Toyota Camry were not flexible fuel vehicles, and no modifications were made to them for this research. Care was taken to eliminate any human inputs that might render the tests unscientific, including the use of a computerized data logger and strict controls on the vehicles, fuel, and terrain. The test was conducted by Allen Kasperson, a Fuel Research Specialist and instructor with more than 30 years of experience training automobile and truck technicians at Lake Area Vocational Technical Institute in Watertown, South Dakota. The study also examined an E10 blend that had been denatured with iso-pentane and soy biodiesel, a denaturant combination that Kasperson had studied and found to have lowered the fuel's reid vapor pressure (RVP). While the RVP tests in this study were inconclusive, the blend did perform better than unleaded in most tests. Read full results of the study Miles per gallon The three vehicles averaged only 1.5% lower mileage with E10, 2.2% lower mileage with E20, 5.1% lower mileage with E30, and increased mileage of 1.7% when using the specially denatured E10 blend. Cost per mile Although the MPG of ethanol blends was slightly lower than the unleaded, the cost per mile of operation was generally lower. Also, the higher the concentrations of ethanol, the lower the cost per mile. Using the study's average MPG, E10 is less expensive per mile than unleaded until ethanol's cost is nearly 30 cents above unleaded. On a $20 bill, drivers can travel up to 15 miles farther on ethanol-blended fuel than on straight unleaded. Driveability Contrary to statements commonly made by vehicle manufacturers and technicians, no warning lights were displayed at any time while operating on any of the fuel blends. The data logger used for the research monitored all systems and detected no malfunction indicator lights (MIL), diagnostic trouble code lights (DTC), or emissions DTCs. Also, it has been assumed that in older model vehicles the oxygen sensor could not recognize fuel with ethanol content higher than 10% and therefore caused a malfunction indicator light to be displayed. In all vehicles used, the car's computer seemed to have the ability to adjust the air/fuel ratio normally with ethanol blends even beyond the standard 10%. The study cautioned that motorists should not use fuel with concentrations of ethanol higher than those recommended by the vehicles' manufacturers, but called for more research to determine if those fuels should be approved for use in standard, non flexible fuel vehicles. “If drivers want to save money at the pump as gas prices reach new record highs, this pilot study confirms that ethanol is the fuel of choice,” said Brian Jennings, ACE Executive Vice President. “Using ethanol is like money in your pocket, and you feel good about filling up on this homegrown fuel because it comes from America's farm fields, not the oil fields of the Middle East.” “The bottom line is that, in addition to offering higher performance and lower emissions, ethanol-blended fuel is easier on the pocketbooks of American motorists,” Lamberty said. |
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This is the link from seniorjose's post. http://www.ethanol.org/ Why did they do E10-E30 in non FFV vehicles and not compare costs per mile of E85 in FFV's? I'm always wary of information provided by "unbiased" sources on a lobbing website.
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Replying to: lmyers92123 (Jun 15, 2006 4:28 pm) Maybe that is where the good news about ethanol resides. We have actually strayed from the original topic. That is as you have mentioned E85 is the subject on the thread. And whether it is good for the country made from Corn (yellow). I'm sure if they had tested a FFV with E85 it would not have looked real good for the guys selling this boondoggle. So they go with mixtures that would void your auto warranty using anything stronger than E10. I actually am not anti ethanol. I am anti mandate and mega farmer. As this report indicates less corn will be available next year. That drives the price of ethanol above the current $3.50 per gallon. If we are only worried about the guy with the FFV no big deal he can buy regular gas and tell ADM to buzz off. With the E7-E10 mandate for all regular unleaded. It will drive all gas prices even higher. With the 3.8 million acre decline in plantings that was indicated in the March intentions, a trend U.S. corn yield would produce a crop about 900 million bushels below potential 2006-07 utilization Iowa corn projection |
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Replying to: lmyers92123 (Jun 15, 2006 3:59 pm) That's impossible since the amount of ethanol produced only accounts for 3-4% of our fuel consumption. E10 has significance in that all gasoline burning cars can use E10 without voiding their warranties. I suspect that every gasoline burning car could also run on E85. Its just at some point the corrosive nature of ethanol would eventually cause problems for those vehicles not designed for this fuel. I hope we put out many alternative fuels and break the cycle. Competition, in general, is great for the consumer. I agree. We all want energy independence. Allow the market some say in what is the best approach. Minimize politics. Ethanol cannot be separated from politics.
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| I recently read an article expressing that OPEC is concerned with the current emphasis on exploring alternative fuels. They feel like a price of 50-55 dollars per barrel would be consistent with their interests of maximizing profit and perpetuating oil economies. I'm not sure what this has to do with the ethanol discussion, but I find it interesting. Specifically its the fact that although OPEC would like for oil prices to be cheaper they are no longer in the position to make it happen. To me that is an indication of a system that is strained very close to capacity. I personally hope that gas prices stay high because I welcome the increased R&D into alternatives that it has spurred. | |
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