Corn!

What oil is that again?

Gunner

Political Correctness

A doctrine fostered by a delusional, illogical liberal minority and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

It's often also used by people who feel that said claim has been pulled out of someone's ass. As in this case. Someone showed me a left-leaning "cost of war" site, you see, a month or three ago, that was at 800 Billion or so at the time. So even by that source, it's "nearly a trillion", not "trillions". But by all means, feel free to assume one motivation and set of facts when quite another is true.

Right. Let's punish complanies for being successful, that's a -great- idea.

And there George and (Jerry? Dennis? Sorry...), is _exactly_ what I figured would happen.

I don't know that this is a settled question, although I have read articles (in Science?) claiming that ethanol no longer costs more to make than it yields.

Biodiesel does seem the better alternative.

True. It's a fraught question.

Therein lies the problem. If the gain is only 20%, even after severe pencil-whipping, then it will never pay in practice. Better to just burn the oil directly, and skip the intervening complexity.

I don't know if the 20% gain analysis included the energy cost of building all that intervening complexity. I suspect not, but the articles I read were not clear on the issue. They may have ignored this issue on the theory that in steady state all that already exists, but it isn't quite that simple. The correct analysis is steady state, but includes the wearout and replacement of the infrastructure. And interest cost of the bonds used to purchase same.

For comparison, extracting fossil fuels yields something like ten times the energy cost of the extraction, including everything, in a very mature industry. This is why it's proven quite difficult to come up with economically viable forms of alternative energy.

Joe Gwinn

It's not their success that's the issue, Dave. It's their power to manipulate the market. ADM has screwed up the economics of agriculture purely in their favor, and they would like to do the same with alternative energy. Unka' George's 5% figure may be extreme, but the idea is a reasonable one, because the only way you can control those avaricious, manipulative bastards is to put a C-clamp on their market share.

Their success didn't come from innovation or from anything else that benefits the economy, farmers, consumers, or anyone else but themselves. They didn't invent ethanol or any of the methods of producing it. It was all about taxes and subsidies.

-- Ed Huntress

That's been my feeling for quite a while, but I also accept that there is a long period of development in which we have to accept a loss on the hope that the optimists are correct, that improvements will lead to better net yields.

Still, corn-based ethanol, as you say, does not look like a significant improvement over what we have. I'm hoping that cellulosic will be a better bet, in which case the corn-based will have served the purpose of getting infrastructure and distribution ready for the use of more ethanol. There are

77 new corn-based plants under construction right now but only a few pilot plants for cellulosic. It will be a long time coming.

Yes, I explain that to the ethanol and biodiesel optimists and they think I'm just being a wet blanket. Detailed energy audits are needed. But among those who could afford to produce them, almost none of them feel it's in their political or economic interest to perform them.

-- Ed Huntress

============ There is no punishment involved, just protection of the public interest. Also you may wish to examine in detail exactly what you mean by "successful." In one sense, Al Capone's enterprises were very successful, but a drag on the total Chicago economy.

Too many corporations are again making money the old fashioned way -- they steal it. Unka George (George McDuffee) ============================= ...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?

Rudyard Kipling The Naulahka, ch. 5, heading (1892).

========= More than likely biodiesel would be the way to go with a "clean sheet of paper." However, there is a huge base of automobiles and light trucks which require gasoline, and very few with diesel engines. Indeed, the major automobile companies are currently making very few diesel powered cars and light trucks available, albeit with pervasive EPA foot-dragging and sabotage.

In any case why does it have to be either/or, when "and" is clearly the better alternative. Biodiesel for the large trucks, locomotives, etc, and gasohol for the existing spark ignition vehicle fleet.

In case you did not see the item, the US set another record for the current account balance of trade deficit. Much of this was for petroleum.

Unka George (George McDuffee) ============================= ...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?

Rudyard Kipling The Naulahka, ch. 5, heading (1892).

=========== It is precisely this type of "pencil whipping" that has brought so many apparently well-run and profitable American corporations down. No matter how thin you slice the baloney, *ALL* the costs must be paid sooner or later, no matter how well these are allocated, capitalized or otherwise disguised. Unka George (George McDuffee) ============================= ...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?

Rudyard Kipling The Naulahka, ch. 5, heading (1892).

This is from a cost accounts perspective.

Because of the huge improvement in the current account balance of trade deficits and the economic multiplier effect of the money circulation in the US economy, we would be *MUCH* better off, even if the direct/first costs were *HIGHER* than petro based fuels that we must import.

There are also national defense considerations, and the elimination of the need for the US government to become involved in tribal/religious disputes. Unka George (George McDuffee) ============================= ...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?

Rudyard Kipling The Naulahka, ch. 5, heading (1892).

=================== Problem here is that if we use common business accounting terms, all the above number includes is "direct labor" and some "direct material" costs. Totally ignored are the labor burden and material burden costs, and the total direct material costs. For example, much of the existing military vehicle stocks [ground and air] have been worn out and will require replacement or remanufacture. "Deferred maintenance" and under reporting of depreciation are typical corporate accounting dodges used to artificially reduce costs.

Typically, material and labor burden rates are much higher than the direct costs, and overhead rates of 250% or more are not uncommon.

Additionally there are what are called G&A [general and administrative] costs which are generally significant, typically

15% or more of the total cost.

There are also the costs that are incurred but not recorded. In business these are typically retirement benefits such as medical and pension costs, and "in the money" executive stock options, possibly "spring loaded," or "backdated."

Very large but difficult to quantify costs are also incurred in other areas such as "good will" write-down, and credit rating downgrade which increases the cost of capital.

Even assuming 365$ billion number is valid, when reasonable overhead/burden rates and G&A are included, the current total is well over a trillion. Consequential, "incurred but not recorded," and opportunity costs will significantly increase this enormous total.

Unka George (George McDuffee) ============================= ...and at the end of the fight is a tombstone white with the name of the late deceased, and the epitaph drear: ?A Fool lies here, who tried to hustle the East.?

Rudyard Kipling The Naulahka, ch. 5, heading (1892).

Don't play dumb Gunner. You know what oil.

Yes and?

Importance of Iraqi Oil to the U.S. During December 2002, the United States imported 11.3 million barrels of oil from Iraq. In comparison, imports from other major OPEC oil-producing countries during December 2002 included:

Saudi Arabia - 56.2 million barrels Venezuela 20.2 million barrels Nigeria 19.3 million barrels Kuwait - 5.9 million barrels Algeria - 1.2 million barrels

Leading imports from non-OPEC countries during December 2002 included:

Canada 46.2 million barrels Mexico 53.8 million barrels United Kingdom 11.7 million barrels Norway 4.5 million barrels

Oh f*ck yes...we are certainly reaping the benefits of Iraqi Oil....

Heads up f****it..it if was "all about the oiiiiiiiiiillllllll" we would have partitioned Iraq off into 3 parts, which would give the Kurds (our friends) the oil and let the rest of the country go to hell.

You really have no common sense or any capability for strategic thought, do you?

Bummer, must suck to be you.

Gunner

Political Correctness

A doctrine fostered by a delusional, illogical liberal minority and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

ISTR that Sanctions were in place and the USA was planning war on Iraq at the time. So, yes, quite a lot of oil...

Mark Rand RTFM

You of course are wrong.

Gunner

Political Correctness

A doctrine fostered by a delusional, illogical liberal minority and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

Gunner, oil is the most fungible commodity in the world. It doesn't matter a damn where we're "importing" it from. What matters to us, and to every other industrial nation in the world, is how total supply relates to total consumption. If we get it from Iraq or from Venezuela, or from the North Slope, for that matter, doesn't matter a bit, as long as Iraq is supplying

*some* oil to *someone* who's buying oil in the world markets. Squeeze the balloon in one place and it just expands in another. That is, unless OPEC suddenly gets discipline and squeezes us from every angle at once. But that only happened once, and only for about a year. Then their discipline broke down, as it always does.

We buy oil from Canada, for example, because the channels of distribution work out best that way. But Canada buys oil from other parts of the world, even though they're also an exporter. It's all about pricing and distribution. To the industrial countries, it often comes in one end and goes out the other.

The danger to us, and to everyone, is if Iraq's supply is completely cut off and China simultaneously starts buying a lot more. That's trouble. But it doesn't matter where it comes from, as long as we're not stuck trying to suddenly replace large percentages of light crude with too much sour, heavy slop.

So much for the "strategic thought" that you think you're so good at. You can't understand oil unless you know the full story, as it was told over decade ago in _The Prize_, by Daniel Yergin. That's 873 pages, and it's still the bible. You aren't going to get it from statistics and polemics you find on Google.

-- Ed Huntress

So then, keeping Iraqi oil flowing not only benefits our economy but the whole world. You'd think the rest of the world would be more appreciative. Maybe they didn't read Daniel Yergin's book. GW

I'm sure they did. Everyone important in the oil business knows it well. Anyone who doesn't know the book well doesn't know much about the international oil business. It's that absolute.

As for the rest of the world's appreciation, they see us as the country whose political actions have blocked most of the oil output from Iraq, which is quite true. To the world, we're the problem here. They don't care who's selling them oil from Iraq, only that someone is.

-- Ed Huntress