Ethanol Scam: Political Boondoggle

Rolling Stone is not the height of American journalism, but I’ll take justification that I’m not crazy wherever I can get it. Kudos to them for use of the word boondoggle. I posted my rant against ethanol on July 20th, beating out Rolling Stone by 4 days. Blatant plagiarism, and I am currently considering my options vis-a-vis legal action. Being highly knowledgeable about the subject, I noticed several liberties taken by the writer. Nothing that was outright dishonest, but perhaps over-simplified. It’s easy to forget how much is hidden under the surface with any complex subject.

Following is a few bits and pieces of the RS article and, I can only imagine, my own commentary. “This is not just hype — it’s dangerous, delusional bullshit.” Certainly my type of journalism.

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The first page of the article points out the current massive ethanol subsidies and how politicians – particularly Democratic presidential hopefuls – are climbing all over each other to make the biggest proclamation of future ethanol production. Second page starts by noting that “energy independence [has become] a universal political slogan.” I predicted the growth in politicians whoring “energy independence” a years ago when it was a blip. Just keeping score; pessimistic futurism maintains a significant lead.

RS brings up the concept of energy returned on energy invested (EROEI), which I think is impressive:

Nor is all ethanol created equal. In Brazil, ethanol made from sugar cane has an energy balance of 8-to-1 — that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That’s a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 – making it practically worthless as an energy source. “Corn ethanol is essentially a way of recycling natural gas,” says Robert Rapier, an oil-industry engineer who runs the R-Squared Energy Blog.

I have to question where they got those numbers; when I searched for a legitimate source, all I found were guesses and arguments. A cursory search for Brazilian ethanol EROEI shows that 8:1 is actually on the lower end of estimates. I appreciate the use of a conservative estimate, and it’s still an impressive number. As long as Brazil can make enough to support their habit and are able to make the process sustainable, they have attained energy independence. I doubt this is fully reflected in the stock prices of corporations operating in Brazil, so if you’re looking for a long-term hedge against increasing energy costs . . .

How energy-intensive it is to extract oil varies from location to location, which has geopolitical implications. I have long see numbers thrown around stating that the EROEI of Texan oil in the early stages of the boom was between 50:1 and 100:1. That number starts lower when extracting from less accessible sources and always drops as that source is depleted. Extraction operations cease not when the source of oil is fully exhausted, but when they are no longer profitable. Iraqi oil is desirable for reasons beyond massive estimated reserves. Iraqi crude is both high quality and largely untapped. If some people would just stop exploding everything, Iraq would produce some incredibly profitable oil.

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I conducted a brief Google search to verify that Iraqi oil was high quality and I found this seemingly well-researched report that expands on the reserves/quality/profitability of Iraqi oil. I also clicked on a Tripod link titled “Is It All About Oil? – The Iraq War as a Grab for Mineral Wealth” on a lark – the subject really brings out the crazy in conspiracy theorists. What’s this? The site is maintained by a “doctor” who is trying to sell his books – now I know I’m in for a treat. His curriculum vitae lists his PhD in Philosophy from a paper mill, which is obvious since his previous college experience is only “a few semesters in the Technion – Israel Institute of Technology, Haifa.” I’m not sure if he thinks dropping out of school is an accomplishment, or if he’s compulsively honest. After all, why not just lie about where you got your PhD like was taught when I got mine at Stanford. He also has a number of “certifications” from an online pre-hire employment testing agency. I’m not sure if “certified” means what he thinks it does.

Whenever I get frustrated by how crazy someone appears to be, I need to remind myself that they probably are crazy. This guy writes extensively on narcissistic personality disorder, presumably from experience. I think Dr. Shmuel (Sam) Vaknin’s argument is that the war was not about oil (as we are not dependent on Middle Eastern oil), but a cover to eventually relocate our Persian Gulf military presence to Iraq. Weird guy., not sure if he understands energy.

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There are many factors that influence the EROEI of oil. The energy expended in transportation to markets and the construction of pipelines. Not just the running cost, but also the building cost of machinery required for extraction. How do you factor in the enormous energy usage of militaries worldwide? Even if you could determine total military energy use, it is impossible to divine the percentage of that number that is used to secure access to oil.

The fact that we expend so much of a consumable, limited resource to protect our access to it is… something. A paradox is “a statement or proposition that seems self-contradictory or absurd but in reality expresses a possible truth.” Despite perhaps sounding paradoxical, the proposition makes complete sense given the nature of the resource and thus is not absurd. It is a statement or proposition that seems paradoxical but in reality represents a logical, definite truth. This situation approximates to reverse dramatic irony: the players in this crude facade are aware of what’s going on, but the audience is seemingly unaware.

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Rolling Stone also does a decent job of briefly explaining Archer Daniels Midland’s role in the ethanol boom:

The ethanol boondoggle is largely a tribute to the political muscle of a single company: agribusiness giant Archer Daniels Midland. In the 1970s, looking for new ways to profit from corn, ADM began pushing ethanol as a fuel additive. By the early 1980s, ADM was producing 175 million gallons of ethanol a year. The company’s then-chairman, Dwayne Andreas, struck up a close relationship with Sen. Bob Dole of Kansas, a.k.a. “Senator Ethanol.” During the 1992 election, ADM gave $1 million to Dole and his friends in the GOP (compared with $455,000 to the Democrats). In return, Dole helped the company secure billions of dollars in subsidies and tax breaks. In 1995, the conservative Cato Institute, estimating that nearly half of ADM’s profits came from products either subsidized or protected by the federal government, called the company “the most prominent recipient of corporate welfare in recent U.S. history.”

Today, ADM is the leading producer of ethanol, supplying more than 1 billion gallons of the fuel additive last year. Ethanol is propped up by more than 200 tax breaks and subsidies worth at least $5.5 billion a year. And ADM continues to give back: Since 2000, the company has contributed $3.7 million to state and federal politicians.

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I came across this article on Fark and had to browse the related thread. The good side of the thread is that everybody hates Rolling Stone, and as a result linked to better articles. The bad side is the extreme number of energy misconceptions that exist, even among people who have clearly done some research and consider themselves to be highly educated on the subject.

A number of people seem to believe that the backlash against US/corn-ethanol is the result of oil industry chicanery. Another argument is that ethanol must be worthwhile because corporations (that are getting rich off of it) are embracing it. People who know a little bit about the future of energy are starting to embrace very illogical positions. It’s not hard to see why.

Trying to source a couple stats required a visit to my old oil stomping grounds. There are good resources for news and discussion like The Oil Drum and Energy Bulletin. There are cultic doomsday sites like Life After the Oil Crash and the message boards on Peakoil.com, and on the other side your garden variety “peak oil is a myth” sites.

There are quite a few people who are obsessed with constructing the most cataclysmic, apocalyptic die-off scenarios related to oil production peaking. There’s no way out and we are all doomed! The attitude one adopts is deeply tied to psychology. The doomsday scenario will speak to certain people. Those that can’t handle that will fall into the “ethanol will save us because it has to” trap.

When I went through my peak oil phase, it was a real struggle to keep away from extremes. Beyond that, it was a full time job educating myself on the background issues and then keeping up with energy news. In fact, there are many full time jobs in this field, and I’d have to assume there’s a good future in the field. I briefly considered applying to get a master’s through Berkeley’s Energy and Resources Group before I realized they wouldn’t accept someone with my “unique academic history.” I’ve easily broken the 1000 man-hour mark researching these complex and intertwining topics, and it took hundreds of hours of fairly difficult work for anything to click meaningfully.

You could call me dense, but true understanding takes time. Admittedly, it is much easier to sleep at night when the government and/or free market are going to take care of everything for you. It’s better to acknowledge that something is too complex to be reduced to a simple solution than it is to embrace that solution and drown out competing views.

And just think… oil and natural gas are formed from the remains of living things. We use them to grow our food and power every aspect of modern society. So like, dude, everything is totally interconnected. Trip out on that.