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Remember how ethanol was going to save America?

Less than two years ago, US grain farmers were rubbing their hands with glee at the thought of all the ethanol dollars soon to be pouring into their bank accounts, as a surge in demand for corn meant that, once again, it was fun to be a farmer in America.

In his 2007 State of the Union address, President George W Bush mandated a seven-fold increase in ethanol production. It would, he said, take away US dependence on foreign oil at a time when gas prices were soaring through the forecourt roof.

As a direct result of Bush’s mandate, the ethanol industry borrowed heavily against future profits as it geared up to handle the seven-fold increase demanded by the White House. Farmers shifted production, bought new equipment, and hocked themselves to their bank managers.

A new era of automobile fuel production was about to begin.

Within months, the price of corn skyrocketed. Consumers, already hit by the rising cost of goods due to high oil prices, now found the price of foodstuffs in their local supermarkets rising ever more sharply as corn – this basic commodity of the food industry – became impossibly expensive.

An agricultural industry that for years had developed processed foods based around corn production, that promoted meat products as the “staple American food” (farm animals exist on corn feeds) suddenly found itself unable to supply these commodities at a sustainable price. Not enough corn could be produced to satisfy both the demands of the ethanol and food industries.

It’s hard to know how this crazy, ill-thought-out, situation would have eventually played out, had not one factor come into play that no-one appeared to visualize; certainly not the US government.

In June 2008, oil peaked at over $126 a barrel. By December 2008, it had collapsed back to under $33, taking with it the hopes and dreams of farmers, financiers, and ethanol industry operatives throughout the country.

‘Verasun Energy Corporation’ is an ethanol producer in the US. It was founded in 2001. According to the company’s blurb:

VeraSun Energy Corporation, headquartered in Sioux Falls, S.D., is a leading producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states. VeraSun Energy currently has an annual production capacity potential of approximately 1.64 billion gallons of ethanol and 5 million tons of distillers grains.^[1]

In 2006, Verasun was floated on the NY Stock Exchange. In April 2007 it acquired the company, US Bioenergy, thus becoming the biggest ethanol producer in the United States.

Don Endres, CEO of VeraSun, told the Grand Rapids Press back in April 2007:

We are competitive with $115 a barrel for oil, or $3.50 a gallon of gas, at $5 a bushel for corn. We have a lot of runway in front of us.”^[2]

An unknown number of Verasun’s “16 production facilities in eight states” now stand idle. In December 2008 the company filed for Chapter 11 bankruptcy.

With oil down around $30, gas below $2, and corn back at $3.50 a bushel, I guess the runway ran out.

Ethanol from corn was never viable, either as a green fuel or a panacea for America’s reliance on imported oil. Ethanol from other vegetative matter may still prove a stop-gap, if it can be made to work economically.

The marriage of corn and ethanol was doomed from the start. Ill conceived economics, coupled with a US president too easily persuaded by greed-induced advisors, meant divorce was inevitable, with all the usual messy consequences.

It will probably never be known just how much effect this farcical episode had on the plunging US economy, how much of the blame can be laid at its door. There is no doubt the sudden food cost increases in the supermarkets, coupled with high gas prices, caused a significant drop in consumer confidence, even before the financial sector fiasco hit the headlines.

All-in-all, it’s yet another heirloom of the George W Bush method of government, to be added to the ever-growing list, that one day will hang like partly unrolled toilet tissue in the grubby restroom of his legacy.

^{[1] “Verasun Energy website”}

^[2] “US Bioenergy joins ethanol giant Verasun Energy” Grand Rapids Press, May 6th 2008

^{NOTE: Sioux Falls, S.D., February 6, 2009 – VeraSun Energy Corporation today announced that the Company filed a Bid Procedures and Sale Motion in the United States Bankruptcy Court for the District of Delaware seeking authority to sell substantially all of the assets of VeraSun Energy Corporation and 24 of its affiliates through a court-approved sale process.}

Filed under: Ethanol effervescence

“I’m sorry, so sorry, that I was such a fool………” warbled country singer Brenda Lee, way back in those good old fifties and sixties when Saturday night was “boppin’ night” down the local church hall or youth club.

That little five letter word appears to have made something of a comeback of late, though hardly due to unrequited love, as was the case in Brenda Lee’s smash hit.

We’ve heard the word, “sorry,” a number of times in the last few weeks. Perhaps most prominent was the apology of Kaing Guek Eav, or “Duch” as he was notoriously known, whose trial for Khmer Rouge atrocities opened today in the Cambodian capitol, Phnom Penh.^[1]

Olympic record holder, Michael Phelps, was quick to cry, “Sorry,” after being caught on camera inhaling marijuana smoke through a glass bong while out partying recently.^[2]

Today, Madonna’s ex-lover and baseball star, Alex Rodriguez, bemoaned the immaturity that caused him to turn to steroid use – while ignoring all those similarly-aged players who didn’t – and begged America to forgive him.^[3]

For Phelps and Rodriguez, all they’re sorry for is being found out. The abject apologies to the American people have more to do with preserving their standing in the sports they represent, than any genuine sense of regret over what they did.

Oddly, only one of these penitents who can be taken seriously. Kaing Guek Eav, at 66, has nothing to gain from his contrition. He will surely go to prison for life. As a born-again Christian, however, it is likely his remorse is sincere.

In two weeks time the trial for perjury of baseball star, Barry Bonds, will commence.^[4] Bonds, unlike his fellow American sports cheats, chose to deny he ever used drugs, rather than seek absolution. No doubt, he hopes not to be proved wrong.

Time will tell, though with the prosecution set to call as many as 39 witnesses to testify against Bonds, before too long we may well experience yet another American sportsman weeping openly and begging his countrymen’s forgiveness.

^{[1] “Landmark Khmer Rouge trial starts” BBC, February 17th 2009}

^{[2] “Here’s A Riddle” Sparrow Chat, February 1st 2009}

^{[3] “Alex Rodriguez press conference live blog” USA Today, February 17th 2009}

^{[4] “Feds: Estalella said Bonds admitted steroid use” SFGate, February 14th 2009}

Filed under: And what about those bankers, then?

This is the Atlantic Ocean:

It’s large. In fact, it’s very, very, large. The Atlantic Ocean covers over 41 million square miles of the Earth’s surface.

This is the Atlantic Ocean with a nuclear-armed submarine highlighted.

Even though it may be on the surface, cruising at about eighteen knots, unfortunately, you won’t actually be able to see it. It’s way, way, too small.

This is an image of the Earth, showing rather a lot of orbiting satellites, put there specifically to aid communications and navigation.

Despite the Atlantic Ocean being so very, very, large, and even though a nuclear submarine is really very tiny by comparison; notwithstanding 17,000 satellites zooming around above our heads designed to prevent it happening, earlier this month, this……

……managed to collide with, this……

……in the middle of the Atlantic Ocean.^[1]

And neither even knew the other was there.

Given the payload carried by both vessels, it does little to inspire confidence.

^{[1] “Nuclear subs collide in Atlantic” BBC, February 16th 2009}

Filed under: Left a bit, no, right a bit