Saturday, February 18, 2006

Ethanol’s Corn Usage

In the last 4 years corn used for ethanol production has increased by over 50% from 996 million bushels to and estimated 1,500 million bushel in this current marketing year. In the last 10 years corn usage for ethanol has tripled, resulting in higher commodity prices for farmers and an alternative fuel source for the USA.

Presently there are 95 ethanol plants in operation with another 31 under construction and nine going thru expansions. It is expected that another 50 to 70 new plants will be built in the next 7 years.

Ethanol production is estimated at 5 billion gallons of fuel for 2006, up from 4 billion gallons in 2005. At $2/gallon that is $10 billion/year that we save in foreign reserves as a country.

3 comments:

Gary Dikkers said...

Jack,

Question: Do you know what is needed to grow all that corn?

Answer: Natural gas. (Over 90% of the nitrogen fertilizers corn farmers need to grow high yields is now made form natural gas.)

Question: Do you know where more and more of that nitrogen fertilizer comes from?

Answer: Because the demand for natural gas is fast outstripping the domestic supply, fertilizer plants all over the U.S. have been shutting down. Right now almost 60% of our nitrogen fertilizer is imported after being made outside this country with foreign natural gas. Estimates are that within five years almost 100% of our nitrogen fertilizer will be imported.

Question: Do you think it makes sense to trade an ill-advised dependence on foreign oil for an equally ill-advised dependence on foreign natural gas? (This time I'll let you answer.)

Best regards,

Gary Dikkers

BoomtownUSA said...

We only import about 25% of our natural gas consumption in the USA, with 95% of that coming from Canada. The development of the new natural gas pipeline from Alaska to the lower 48 will give us even more natural gas capacity and stability. I also believe that there is much less of a chance of a supply disruption from Canada than there is with oil from the Middle East.

Gary Dikkers said...

Jack,

We may import only 25% of our natural gas, but we import more than 60% of our nitrogen fertilizer. The reason is that natural gas has gotten too expensive for our fertilizer plants to compete for domestic natural gas that is being stretched by environmental requirements to burn a clean fuel.

Also, don't rely too much on Canadian natural gas. They are making plans to divert more and more of that to use as the energy source for cooking oil out of the Athabasca tar sands.

The simple truth is that we can't grow the massive amounts of corn we do without nitrogen fertilizers and an increasingly large percentage of those fertilizers are imported after being made with foreign natural gas.

Who could have imagined the corn farmers around Effingham being dependent on foreign natural gas, eh?