random thoughts on gas

Mostly other people's thoughts but found them oddly connected. Reading WIRED magazine this morning while in the room down the hall (if you know what I mean!) and came across these:

1 - "I refuse to use bioplastic, which comes from something that people can eat. Scientists agree that we have a real food problem, a famine approaching. It's a crime against humanity to take something you can eat and make a chair - or use it as gas for your SUV." designer Phillipe Starck in response to criticism of his plastic chair design.

2 - I have to summarize before I quote. Tom Friedman - NY Times columnist and author of The World is Flat, is talking about energy which of course must lead to petroleum. He starts with "The stone age didn't end when we ran out of stone." He is asking and looking for a solution to our energy problems and suggests: "We need 100,000 people in 100,000 garages trying 100,000 things - in the hope that five of them break through. He feels current efforts are hopeless and that it will take a top-down systems approach to fix this. And the quote I've been leading up to? "Without a systems approach, what do you end up with? Corn ethanol in Iowa."

So here you have two very different people bit who agree on at least one thing: we have energy (and food) problems and ethanol is not the way to go.

I've written before on ethanol and with as little as I know now, it does not seem to be the way we can get out of this crisis. I am happy though for gas that seems to be moving downward toward $3/gallon. If in July of 2006 when I filled up for $1.99/gallon you'd have told me 1) I'd be paying $3.35/gallon and 2) I'd be happy about it; I'd have thought you were crazy!

We have friends in Rogersville whose lives and livelihoods may be affected by the construction and operation of an Ethanol plant almost literally in their backyard. There's a major hearing on this case that is going to happen on the MSU campus in September. If I can get off work that day I'd like to sit in for personal education and to lend moral support to my friends.

Don’t Do it Again!

Early in 2007 our esteemed elected officials in Jefferson City passed a bill that in the guise of promoting competition, forever changed the landscape of cable in Missouri. AT&T lobbied hard and got what they wanted. Cities and ultimately consumers lost – all in the name of choice and competition.

I won’t belabor that lost cause now – just follow what is happening in cities across the country where AT&T is moving in. Technical problems. A lesser-quality-signal than cable. Slight – but noticeable delays in switching channels and of course what is near and dear – PEG. This once bastion of local programming has been (or will be) relegated to a sort of hybrid channel that forces viewers to first select a channel then make another selection once there to pick the particular channel they wish to watch. They say on the internet if you ask people to make too many clicks, they won’t get to your site. I think the same thing will happen here. People just wont bother.

And one thing we haven’t seen yet in Springfield are the huge boxes AT&T has to put up everywhere to make this work. Because the legislature effectively took away some local authority, these enormous boxes can be put wherever AT&T thinks they need them – just hope one doesn’t end up in your front yard.

But my point is not cable or lack of it but rather that it appears our elected officials may once again be entering an area where they don’t know enough – full disclosure - NEITHER DO I!

I read a blurb yesterday that they may be considering some sort of State legislation related to ethanol and subsidies.

I don’t know enough about ethanol but have read that if we somehow could convert all our corn production and even perhaps additional available land for more corn, and somehow build the multi-million-dollar processing plants and somehow find enough groundwater to support the processing operation – at best we might reduce our dependence on foreign oil by 2.5 %. That’s TWO POINT FIVE PERCENT!

Let’s look at subsidies.

Big oil will no doubt be involved. Do they need any sort of subsidy?

Large agricultural corporations like ADM and Cargill will want in on the action. Do they need a financial boost?

Local farmers who grow corn have seen their prices rise dramatically – partly based on supply and demand and partly on speculation. So they are getting more for their crop than before. But they are getting some sort of windfall since their prices for fuel and fertilizer and other operating costs have gone up. I just read about a Mississippi family who switched from cotton to corn for more profits. That is their choice but if we structure our system to encourage much more of this – one more industry will be shoved out – overseas – maybe it is already.

So who needs the subsidy?

Locally there is an issue about putting one of the ethanol refineries near a small town. The citizens are up in arms that such an operation could begin to eat up their precious water supply among other things.

Do the folks who want to build the plant need a subsidy? I undertstand a little about economic development and enticing businesses. I also understand that government often has to build the infrastructure on which these businesses ride.

But the government is not a bank or a loan company (you could debate this point on several levels). If I want to start up a chocolate business – I can’t expect the government to give me a chunk of money and to start encouraging people to eat chocolate. I’ll get enough tax breaks and incentives just the way the tax code is written now to write off lots of things against my potential profits.

Other issues at stake? Did I mention groundwater? I can’t quote figures but the ethanol plants require lots and lots of water to convert the corn into cellulose and then into what ever it is that ends up being ethanol.

For a nice short summary of why ethanol may not be the thing that solves our energy problems – read George Will in Newsweek (Feb. 11, 2008 Bio-Fuel Follies)

Anybody remember the dust bowl? I am way over-simplifying but part of the problem as I recall was so much crop land had been tilled and tilled and then a few dry years come along and all the top soil blows away. I am not a farmer of row crops but I know that corn is hard on the soil. It uses up nutrients and wears it out so you just can’t keep planting corn year after year without giving the land a rest.

I am a farmer or raiser of sheep so I can relate to the rising cost of feed. Just a few weeks ago I went to buy more and the price per 100 pounds had gone up more than $1 in just one month. I know part of this is the price of oil but it is also pegged to the price of corn and all the other commodities that go into feed.

As with so many things, when you push down in one place (subsidies for ethanol) things will simply pop up somewhere else (rising grain prices – erosion – lowering the water table etc.)

I think it is unfair for the State Govt. to start endorsing through a subsidy a business that has not been proven environmentally safe, absolutely necessary and may in and of itself just be a plain old bad idea.

Recession? What Recession?

First off I am no economist and don't really understand markets, commodities - how all the things are supposed to work. But I am hearing/reading that we are in or very near a recession once again. My limited vocabulary says that in a recession there is no growth. I believe that one - if it explains why I haven't had a raise of any decent amount in years. But I also thought that in a recession, prices remained stable or perhaps even dropped somewhat as interest went lower etc. I may have this all backwards.

But two major things jump out at me. 1) Gas prices. They are once again creeping down ever so slightly but this after a really big jump to almost $3/gal. late in 07. We are still only down to the low 2.70s now. 2) Feed.

I bought a ton (literally 2000 lbs.) of feed today for our sheep and 2 cows. In December I paid $4.75/50 lb. bag. Today for the same mix I paid $5.20. That's 45 cents or almost 10%! Holy cow! I tried to talk to the feed store people about commodity pricing and ethanol but I got in way over my head in a hurry so made a hasty and tactful retreat.

I guess I don't understand why if the powers-that-be want our economy to grow, why are prices going up? If they want to stimulate spending of the supposed tax rebate we may end up getting, shouldn't part of the goal be to keep prices at least flat?

And I am more confused than ever about ethanol. If indeed this is why my grain went up 10%, where did this extra go? If it went to a farmer who has been trying to make a living growing corn for his whole life, then you know what? I can handle that. But if it went to big corporate farms who are getting subsidized by the Govt. to grow corn, so they can in turn use up scarce groundwater to make a fuel that is only marginally cheaper but in the long run uses more resources and provide LESS mpg. than regular reduced octane unleaded already does - then I think that is patently unfair. I want my money back!

A politically savvy friend told me today that he thinks Romney is going to win because he is the one who can with some degree of confidence and believability, say to Americans, "I can get us out of this mess."

I don't know. I'm not a Romney fan but if he is the choice of the GOP against almost anybody from the other side, then ...