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tschaid

Fuel for thought

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Forgive me for a long post; but, I believe this is part of the big picture.  I started typing this as a response to engine tuning; but, it really pertains to Big Ethanol and an approach to competition. 

 

First off, utilizing corn as the base raw material, will never replace a significant amount of fossil fuel.  This is clear.  Second, anyone ever see the movie "Wag the Dog" ?  For those that have not, this movie demonstrated how the government can create the illusion ,very successfully, without really doing anything.  Our current government is more about giving the illusion they are doing something when in reality they are doing nothing substantial.  The government will not make increasing Alternative Fuel a requirement because this would be directly contrary to what Big Oil apparently wants.  Even when they do enact law around this, it is down the road and lacks substantial reform. 

 

So, let's step back for a second.  Many know I have been preparing for the day when I will finalize my project.  Of course, that is to significantly reduce my family's dependence on fossil fuels.  Step 1 was to prove my truck could run on E85 efficiently.  Now over 32,000 miles and achieving fuel efficiency of 90% compared to gasoline, that has been accomplished.  Step 2 is to produce my own Alcohol fuel.  The TTB permit requires production in a building detached from the home.  My building is now up and today we will shingle the roof.  I expect to ask for the final inspection by the end of this month.  Mid-July we will begin finalizing the process of producing our own fuel.  We will start with corn and prove this process. Then we will turn to plant cellulose using Dilute Acid Hydrolysis to break the lignin stronghold and get at the sugars.  We will be successful in producing our own fuel.  Then, what is next.  I don't know because each direction provides significant risk.   

 

Option 1:

 

We already have significant investor interest in this project.  What does that mean and what benefit does more money provide?  Well, we could use Illinois grants along with the investor monies and build our own production facility.  This; however, has one big concerning factor.  For example.  Let's say the focus of the new business is to provide "fairly" priced fuel to the consumer.  Corn based ethyl alcohol presents a cost of about $1.40 per gallon (fermenting the corn 2x assuming a 50% yield on the second batch compared to the first batch) when using corn at $3.50 a bushel and gasoline at $3.50 per gallon.  Forgetting about the excise tax credits, raw numbers would then put a reasonable consumer cost at between $2.00 and $2.25 per gallon.  Even if we consider mfgr overhead and transportation costs to deliver the fuel, profits would be very nice.  So, what is wrong with this picture ?  Can Big Oil afford to have E85 selling at 36% less than they have priced gasoline ?  Imagine the ground swell that would surely occur.  My suspicion is Big Oil would intervene and not provide the gasoline necessary to create the 85% / 15% blend unless the E85 price is raised at the pump.  I think this is exactly what is going on today.  To prove it, we would need to get our hands on the contracts between Big Ethanol and Big Oil.  It might be possible to locate a foreign company from which to purchase our gasoline at least for a short term; but, I wouldn't expect this to be sustainable. 

 

Option 2:

 

We already have a number of web sites with plans on how to build your own still.  We even have some that will sell a completed product; but, the costs are high.  Why hasn't this taken off?  Does government legislation somehow restrict who can do what in their back yard ?  I haven't found anything in Illinois State Law and I know of no County ordinances preventing the property owner from producing their own alcohol fuel ?  My belief is the reason this hasn't taken off is either the cost to purchase the equipment is out of range and/or the complexity of building your own setup exceeds most people's desire to reduce their transportation costs.  I believe we can get around both of these by providing a setup at a reasonable cost (investment payback in under two years), teaching people how to use it, and even providing the raw materials on a periodic basis.  So, this has appeal; but, what would then stop Big Oil from pressing for state legislation to prevent home fuel production ?  They wouldn't be terrifically interested unless it became a threat to their big profits.  So, since aspects of this have been around for awhile, and this guarantees people can become self sufficient if they choose, this is likely the best approach.  Small businesses dependent upon transportation would also have an interest. 

 

Option 3:

 

Simply and quietly satisfy my own family's needs and do nothing else.  My total investment targeted at slightly more than $10,000, including my building, would still be paid back in 18 months while gasoline is priced at $3.50. 

 

 

Part of the equation:

 

I will tell you.  My building is designed to be 100% self sufficient without utilizing an open flame for any aspect of the process.  While I do intend to utilize electricity for cooking and distilling, one approach I am considering is to purchase a generator and convert it to run on E100.  My neighbor, a pro in the Heating and Cooling Industry, will recieve the first five gallons as he wants to convert a LP fired furnace to run on E100 or maybe see if we can create a blend of LP and Ethanol.  This will be R&D.  We are assuming nothing and will not be discouraged from trial and error.  This, has already been demonstrated. 

   

I am real interested in feedback on this post.

 

Thanks,

 

Tom

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Very good post. The "Wag the Dog" scenario is unfortunately the way our life is. Right now there is a big push by meat producers to kill ethanol since they like it the way it was a couple of years ago with cheap, subsidized grain. Watch TV now and all you see is how high priced steak is because of ethanol. I asked the feed ration guy yesterday about the cost of gain on cattle and you can make it the same as before or you can make  it a lot more depending on your buying "smarts". There are still opportunities out there if you look. I have been making my own biodiesel for about five years now since it is easier than ethanol----will be interested in how your setup goes---maybe someday. I'm in a couple of ethanol plants,one very successful and one so so, and keep saying, wouldn't it be nice to haul it 14 miles to town and sell it for a little over $2 a gallon to the locals. I guess it's not going to happen.

Marty

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I'm in a couple of ethanol plants,one very successful and one so so, and keep saying, wouldn't it be nice to haul it 14 miles to town and sell it for a little over $2 a gallon to the locals. I guess it's not going to happen.

Marty

 

Marty what's preventing the plants you are in from setting up a couple stations { e85 }and sell it to the local poulations ?

 

Is there a large enough population? Is there enough ffv's in the area ?

 

 

Tom nice to have back

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Dan, ADM markets it all at the good plant. It is railed out to Chicago and places like that. Also I'm in the sticks, so to speak, here. There is an E85 pump at a station within sight of the ethanol plant but it is still priced 25 to 40 cents below 10%. I think that is why there isn't more enthusiasm. As much as I try, nobody wants to do what Utica is doing.

Marty

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Dan, ADM markets it all at the good plant. It is railed out to Chicago and places like that. Also I'm in the sticks, so to speak, here. There is an E85 pump at a station within sight of the ethanol plant but it is still priced 25 to 40 cents below 10%. I think that is why there isn't more enthusiasm. As much as I try, nobody wants to do what Utica is doing.

Marty

 

and the lack of enthusiasm is because it's just far to easy to sell all the production for e10 rather than building out e85.

 

 

What is your feeling, what needs to be done, to happen before this Industry wakes up and starts developing out it's own infrastructure?

 

 

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tschaid- You want your plant to be self energy sufficient? I do not know if it will work for you due to scale, investment, or neighbors but large ethanol plants are looking at making methane from the by-product syrup (solubles) and using the methane to run generators & boilers. What are you doing with your spent mash after second fermentation- will this be sold for cattle feed?

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Dan, If the glut that some say is coming by the end of the year or so happens( this shouldn't even be possible) I think maybe some drastically reduced price, direct marketed ethanol might happen. In a fairly good sized town( ice cream capital of the world) I think Murphy Oil just quit selling at a Walmart so there is  brand new infrastructure that could be used. I think I saw where Murphy shut down quite a few here in Iowa. What do you think 1outlaw----could you twist some arms over here?

Marty

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Seems like a chance to get cheap infrastructure---read the link about Murphy closing a bunch of stations.

 

Murphy USA Closing Six Iowa Stations

Among 47 slated for closure

 

 

WAVERLY, Iowa -- Six Murphy USA gas stations located adjacent to Wal-Mart stores in Iowa will be closed, reported the Associated Press.

 

 

 

The Murphy Oil Corp. stations are in Waverly, Independence, Marshalltown, Anamosa, Grinnell and Le Mars, Iowa, are among 47 stations to be closed.

 

 

 

At the end of April, when Murphy Oil announced that its wholly owned subsidiary Murphy Oil USA Inc. had entered into an agreement with Wal-Mart Stores Inc. and subsidiaries to purchase parcels of property that the company currently leases from Wal-Mart, it said that it would close up to 47 locations and incur after-tax impairment and restoration costs of approximately $18 million in second-quarter 2007 that was not included in previously issued earnings guidance.

 

 

 

A company spokesperson told AP on Tuesday that a list of stations to be closed has been developed but not released.

 

 

 

Murphy USA’s retail presence currently covers 21 states primarily in the Southeast and upper Midwest.

 

 

 

Under the terms of the agreement, the conveyance of the parcels will occur in multiple phases over the next year. Expansion of the Murphy USA program will continue with additional opportunities to purchase new site locations in the future.

 

 

 

Claiborne P. Deming, Murphy Oil’s president and CEO, said when the deal was announced, “The purchase of these parcels reflects our commitment to sustaining the longevity of these very productive assets. We look forward to continuing our association with Wal-Mart as we expand our station base in the future while adhering to our strategy of offering high quality, competitively priced gasoline to our customers.”

 

 

 

As a result of this transaction, capital expenditures for the company are expected to increase by up to approximately $315 million during the 2007/2008 period.

 

 

El Dorado, Ark.-based Murphy Oil has more than 1,000 stations in 21 states.

 

 

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Marty I pass by Waverly everytime I head to Waterloo ..  They built the highway (Ave of Saints) by passing Waverly ... I use to drive through on everytrip ..I'd still pull in to fill up on E85 if they would get it .. 

 

 

Maybe Walmart could use these locations as testing locations for E85 !  Local Ethanol Plants should approach Walmart

 

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