December 27, 2007

Never Heard This One Before

I guess there really is no price increase that someone won't try to blame on ethanol.

Another variable that is increasing demand on propane and driving costs skyward is the rapidly increasing need for corn-based ethanol. According to a Seattle Times article, farmers in the Midwest are spending billions to have tons of corn sent to refineries to make the fuel. The corn must be dried as one step in the production of ethanol. The drying process requires large amounts of propane. In addition, machines used to harvest, plant and plow fields use large amounts of diesel, driving prices even higher and hurting propane inventories.

Now ethanol is to blame for high propane costs. I will try to do some checking to find out how many plants use propane for energy instead of natural gas which is methane.

I truly do not understand that last part about how the diesel needed for planting and harvesting is driving propane prices up. The amount of diesel used for off road uses including farming is minuscule compared to the amount of diesel used for transportation.

Full Article

Update: - From doing some research I found out that 65% of propane comes from natural gas production and 35% comes from refining petroleum. So the price of propane is linked to both the cost of petroleum and the cost of natural gas. So any process that uses either natural gas or petroleum products could be seen as driving up the price of propane. And given the fact that most ethanol plants use natural gas for process energy and that the production of corn requires diesel, I guess you could say that ethanol production is driving up propane costs. But it is in my opinion a really thin argument to single out one industries use of natural gas and diesel and place the blame on it while ignoring all the other uses of each product.

Of course it should be noted that since ethanol is being used in the fuel supply, it lowers the overall need for fuel from petroleum. And since 2006 ethanol has been used to replace MTBE in gasoline. MTBE is made by reacting methanol with isobutylene. Methanol is primarily made from natural gas and isobutylene is a petroleum product. So by replacing MTBE it is lowering the demand for both natural gas and petroleum.


American Biofuels said...

This is no more than a typical attempt to slam ethanol. Let's assume that those wild claims are true. It is small in comparison to the amount of natural gas used to develope the tar sands project in Alberta. Currently they are using enough gas on a daily basis to heat 2 million homes.

Michael A. Gregory said...

I agree. It reminds me of a quote from the article I posted a few days ago, Fighting the Absurd Accusations.

"In some corporate circles ethanol has become as convenient an excuse as “the dog ate my homework” is in grade school."

1outlaw said...

That propane prices would be driven by corn use for ethanol is absurd. Previously this same corn was raised for export and had to be dried to 13% moisture to survive the long storage and sea travel without spoilage. Many ethanol plants can accept corn at 18% moisture for first month's production, 16% for Winter/Spring use, then 14-15% for Summer use provided they own some of the storage or can specify the moisture they will accept.

Michael A. Gregory said...

I think they are talking about the amount of natural gas used to dry the distillers grains. Of course some distillers grains are sold wet, but I don't know what the actual percentage are sold wet.

As I said in the original post you can only use the argument that ethanol production is forcing up propane price in the loosest sense in that any use of natural gas or petroleum forces up propane prices. By that same logic me driving to my parents house on Christmas also forced up propane prices.

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