The Billings Gazette today run quite a few articles about the ethanol industry that were quite interesting and deserve further comment. As any one who regularly reads this knows I oppose the law that would make ethanol in our fuel mandatory.
Gov. Brian Schweitzer">The Second Coming and his disciples think that it is going to be the economic revival of the state if they can force us all to buy gas with ethanol in it.
First off the oil refiners
chime in with their opinion. It is not real surprising that they oppose it but some of the comments are very illuminating.
I have always asked the question, "If ethanol is such a great thing why does it take a government mandate and subsidies to build a plant here? Why isn't the money available through the banks or private financiers?" Then from the article:
Bruce Brodie, manger of the ExxonMobil refinery in Lockwood, said the company does not oppose the use of ethanol blended fuels and in various cities where it is required to reduce pollution, it is provided.
"The company is absolutely opposed to mandates because they upset the free market mechanism and increase costs for consumers," he said.
Brodie said petroleum industry data for a three year period for Missoula, which requires the fuel during the winter months, show that, on average, consumers paid 3 cents a gallon more for the ethanol blend.
He also questioned whether ethanol plants are economically viable without heavy subsidization.
"If they were, banks would be loaning them money now," he said.
My same questions and also points out that this mandate will cost us as consumers more in the long run which I've always said too. Isn't gas prices high enough with out tacking on more expense? When taking about this issue recently I have also pointed out that since corn is so much cheaper than wheat to make ethanol, instead of building plants here companies will just bring ethanol in from the corn producing states to supply our need. Case in point:
The CENEX refinery at Laurel blends ethanol with its gas for those who wish to sell it.
The blending is done at the rack, where tanker trucks fill up. The truck driver calculates how many gallons he needs for each load. The ethanol arrives at the refinery in tanker cars and comes from North and South Dakota and Nebraska, according to a company spokeswoman.
So how is this mandate going to help our economy when we are bringing in the ethanol from out of state? It doesn't, we will just be supporting the large corn producing states and cost us more money. I wish
Gov. Brian Schweitzer">The Second Coming could explain this to me.
This talk about ethanol production leads us to the next story about how much more expensive it will be to
produce ethanol in Montana than the big corn producing states.
Securing the least expensive feedstock for an ethanol plant is critical because the end product is a price-volatile commodity, says a successful ethanol producer who would like to do business in Montana.
However, the added expense of using wheat, which is plentiful in Montana, versus corn, which is not, adds another $15 million on the input side, he says.
"Hello! How do I get by that?" asked Dan Hernandez, CEO and general manager of Midwest Grain Processors in Lakota, Iowa.
"I need a cheap, readily available, abundant supply," he said. "In the United States that is corn or sorghum."
This Dan Hernandez is amazing, he is worried about making money. Nobody talks about making money in ethanol in Montana, it's all about the job opportunities and the cattle feed. He does provide a lot of interesting information about how much more expensive it will be to produce ethanol here than it does if made with corn elsewhere.
Hernandez said, on average, it takes a bushel of corn to produce 2.8 gallons of ethanol. His own plant does a little better at 2.9 gallons/bushel. For wheat, the conversion is 2.7 gallons; for barley, 2.2 gallons.
By using corn, all his input costs total $2.50 a bushel, while wheat alone averages $3.50. "A 40-million gallon a year plant would put me $15 million out of position," he said, referring to the added cost of wheat over corn.
....
The other Montana grain available, barley, has a cost comparable to corn, but produces only 2.2 gallons of ethanol compared to 2.8 for corn, thus requiring more barley to meet the corn equivalent.
The extra expense of making ethanol here is not going to get eaten by the owners of the plant, it will be paid for by the consumers of Montana paying more for their gas. This is economic revival by hurting the consumers?
Then a final little tidbit which is a lot more local than all the others is the article about the
ethanol plant in Hardin. What ethanol plant? Ask the the residents of Hardin, the mayor of Hardin, the Chamber of Commerce in Hardin and the County Commissioners of Big Horn County in Hardin and not a one of them knows any thing about it. All the residents of the area know about it is what we read in the paper. If they were seriously going to build a plant here wouldn't somebody in the area know about it? I think so.
Also at this point I don't know how much Hardin will welcome them. The
new power plant that is going in is not being a very good neighbor and is souring Hardin residents on expansions at the old Holly sugar plant. The power plant claimed they were going to hire a majority of its workers from the Hardin area but they haven't been, unless you consider Billings part of Hardin, most are coming from Billings or out of State. This has the residents of Hardin upset and the rumblings I have heard is that if the ethanol plant ever comes along they are going to try to oppose it.
I hope this rant shows some of the weakness of mandating ethanol on all Montanans and educates people on the harmful effects that SB 293 will have on all of us. It is wrong, besides being a big government mandate that is not necessary, it will cost Montanans more than they will benefit from it. I hope the Legislature learn from North Dakotas example.
The North Dakota Senate killed a bill similar to SB 293 last month.
I know they won't though. They just want to hurt the State with this mandate.
Stupid is forever, ignorance can be fixed. Don Wood
Because Exxon-Mobil and Conoco Phillips dont own the raw material.
Ask Dennis Paxinos about price-fixing of gasoline in Billings. He tried for years to determine the formula refineries use to set the rack (wholesale) price of gasoline. He finally gave up...