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The recent State of the Union address by Pres. Bush has sparked much debate about the production and use of ethanol in the US to help in the effort to reduce our foreign oil importation. It would seem thought that many analysts think there is no way we can produce the amounts of biofuel that the President calls for in his speech.

Specifically, the President’s call to increase the supply of alternative fuels to 35 billion gallons by 2017, has drawn the most reaction. 'We heard a huge number from the President, and the first reaction is no way is that possible,' at least under current circumstances, said Jacob Golbitz of HighQuest Partners in a recent UPI report. He added that even in a best-case scenario the U.S. would only be able to produce 16 billion gallons of biofuel per year by 2015, assuming that most of the biofuel would be corn-based ethanol. A recent Bloomberg report said Exxon Mobil Corp. considers ethanol "irrelevant" as a solution to an addiction that forces the U.S. to import two-thirds of its oil. No "viable, meaningful business proposition" exists for Exxon in ethanol, according to Stuart McGill, Exxon’s senior vice president.

There is strong indication that the bloom is off on ethanol plant production and that even for plants that are on the board and ready to be built there will not be profitability in them and thus the market will suffer. Last year the feeling was that anyone could make money producing ethanol but no so now.

The supply and price of corn may play a prominent role in the future of U.S. ethanol production. U.S. Undersecretary of Agriculture Thomas Dorr said at a clean fuels finance conference in London reported by Bloomberg, "There's clearly a terrific demand on corn right now. There is no question that the next couple of years are going to be painful."

What do you think about ethanol? We want to hear from you. Drop a comment on this blog and share your opinion.

Source: Ethanol

With rising oil costs and environmental concerns has come increased pressure on the motor industry to develop an alternative and greener fuel to power the world's vehicles. But would ethanol be a viable alternative to petrol (gas)?

Ethanol is largely seen as an environmentally friendly alternative to petrol. It is made from crops such as sugarcane in Brazil and soyabean in the US, and it is significantly less polluting than petrol because it doesn't produce sulphur dioxide or lead emissions and, importantly, any carbon dioxide produced can be offset by growing more sugarcane. Cars in the UK, for instance, can currently run on about 10 per cent of ethanol in petrol, but the corrosive effect of ethanol means increasing levels above this can damage the engine if the necessary changes have not been made. Recent moves by Brazil to export biofuels to the European market on a bigger scale have increased interest in ethanol as a possible replacement for petrol. Since signing agreements with Sweden and Japan, Brazil is now interested in developing partnerships with British and European companies. In Brazil ethanol is widely available and it makes up around 40 per cent of fuel consumption and powers over 50 per cent of vehicles. Having spent the last 30 years refining the production of ethanol from sugarcane, Brazil has now become the largest producer and exporter of ethanol in the world.

The technology for creating ethanol has been around since the 1920s, but production only took off in Brazil in the 1980s when the government looked around for alternative sources in the wake of the 1970s oil crisis and rising oil prices. During the 1980s more than 75 per cent of all motor vehicles and around 90 per cent of cars were run on ethanol. But a drop in oil prices and an end to government subsidies meant that ethanol lost it's popularity for a while. However, rising oil prices caused the popularity of ethanol to rise again a couple of years ago, and now over 50 per cent of new cars in Brazil are FFVs (Flexible Fuel Vehicles) that can be run on either pure petrol, pure ethanol or a mixture of the two.

Brazilian production of ethanol is set to rise over the next few years. In 2005 they produced 282,000 barrels of ethanol per day and the expectations are for production to rise to 442,000 barrels per day by 2010. Brazil currently exports 7,200 barrels per day to the US (who also produce their own ethanol from soyabeans). This, of course, is still a drop in the ocean compared to overall US gasoline consumption. And the question is whether or not Europe and, particularly, the UK will become a new customer for Brazil's growing biofuels industry.

We wait to see if becomes the true green alternative and, of course, how much governments - particularly in the UK - squeeze out of us by way of tax!!

More: continued here

There is a good article in Rolling Stone about ethanol. They examine the whole ethanol policy and agribusiness connections with our politicians. I think it is a good read.

The great danger of confronting peak oil and global warming isn't that we will sit on our collective asses and do nothing while civilization collapses, but that we will plunge after "solutions" that will make our problems even worse. Like believing we can replace gasoline with ethanol, the much-hyped biofuel that we make from corn. Ethanol, of course, is nothing new. American refiners will produce nearly 6 billion gallons of corn ethanol this year, mostly for use as a gasoline additive to make engines burn cleaner. But in June, the Senate all but announced that America's future is going to be powered by [tag-tec]biofuels[/tag-tec], mandating the production of 36 billion gallons of ethanol by 2022. According to ethanol boosters, this is the beginning of a much larger revolution that could entirely replace our 21-million-barrel-a-day oil addiction. Midwest farmers will get rich, the air will be cleaner, the planet will be cooler, and, best of all, we can tell those greedy sheiks to fuck off. As the king of ethanol hype, Sen. Chuck Grassley of Iowa, put it recently, "Everything about ethanol is good, good, good."

My feeling is that [tag-ice]ethanol[/tag-ice] is great for a small impact alternative fuel or blended fuel but we sure cannot go the way of turning our corn crops into ethanol and think we are going to save the country from the evil foreign oil.

Rolling Stone's bottom line take:

In the end, the ethanol boom is another manifestation of America's blind faith that technology will solve all our problems.

Energy Tags: ethanol, solar power

Pacific Ethanol, Inc. is a publicly traded company (NASDAQ: PEIX) that is engaged in the development, production and marketing of renewable fuels in the United States. The company has five ethanol plans under construction on the West Coast with expected capacity of 200 million gallons. In addition, the companys wholly owned subsidiary is one of the largest marketers of ethanol and generated in excess of $82 million in sales last year.

To many investors, the whole concept of ethanol is new. Ethanol is a fuel additive that is commonly made from corn, but can also be made from wheat, barley, potatoes and other crops. In addition, new technologies are enabling the production of ethanol from corn stalks, grain straw, paper pulp and even municipal solid waste. The starch or sugar portion of the corn is fermented and then distilled into alcohol. Sounds like a new concept, but early versions of the first automobiles ever produced ran on gasoline or ethanol!

Since January, the stock of Pacific Ethanol, Inc. (NASDAQ: PEIX) has increased almost 400% and currently trades at a market valuation in excess of $1 billion. Why all the investor excitement?

Pacific Ethanol may be in the right place and at the right time for the following reasons:

a) Ethanol is a commercially viable fuel additive that is rapidly taking the place of a fuel additive which has been banned in many states.

b) Ethanol additives results in less pollution than existing gasoline.

c) Demand for ethanol has far exceeded the industries production capacity.

d) A large number of vehicles are already capable of using gasoline mixed with an ethanol additive, usually under a 10% ethanol / 90% gasoline mixture. In addition, many manufacturers have committed sharp increases in the production of vehicles that can take much higher percentages of ethanol.

e) The production of ethanol has been highly profitable.

f) Federal and State governments are rapidly moving towards the use of alternative fuels to reduce dependence on foreign oil.

g) The company has one of the strongest management teams and a very experienced board of directors.

h) The company has attracted significant funding, including approximately $84 million in preferred stock from Cascade Investment, LLC, which is owned by Bill Gates.

Historically, companies with strong management, access to necessary investment capital and with critical mass in a rapidly growing industry - are companies to watch very closely. We believe that the Pacific Ethanol is well positioned to capitalize from the production and marketing of ethanol and should be watched closely.

Joel Arberman

Joel Arberman is the Managing Member of Stock Aware, LLC. We publish a free investment research and analysis newsletter and offer investor awareness services. Learn more at StockAware.com

DALLAS, Jan. 30, 2007 (PRIME NEWSWIRE) (PRIMEZONE) — If you didn't get the chance to hear MN1's interview with Dr. James Latty, CEO of Convergence Ethanol Inc. (OTCBB:CETH), on Monday, Jan. 29, 2007, you can still catch it by downloading the Podcast on www.mn1.com.

The interview starts off with talk about the State of the Union address and some of the important mandates on biorenewable fuels that President Bush proposes.

A 500% increase in ethanol production over the next 10 years.

A 20% reduction of gasoline usage in the next 10 years ago.

And then the importance of the future of ethanol to be produced from things such as wood chips, switch grass etc.

Convergence Ethanol's biorenewable energy project is a woodwaste-to-ethanol refinery in Hearst, Ontario, Canada. The HEO refinery will use modern catalytic processing, as used in oil refineries, to synthetically convert woodwaste into ethanol.

Dr. Latty further discusses the national and global benefits of ethanol and how Convergence Ethanol plans to assist the oil industry in meeting industry goals of providing cost effective, environmentally clean fuels. There is also discussion on completion of a new refinery unit that Convergence Ethanol recently built for Chevron.

For the full interview, visit http://www.mn1.com/mp3/ceth012407.mp3

Ethanol