Monday, March 05, 2007

money floats on oil

Biofuels growth hit by soaring price of grain
High grain prices are threatening the nascent biofuels industry, raising input costs and making the fuel less economic compared with oil. Agricultural commodity prices have reached long-term highs in recent days, based on forecasts of hot and dry weather conditions this year in the US which could result in lower grain yields. This comes after oil prices have fallen by a quarter from their record peaks last year.
Corn prices reached another 10-year high for the second successive day when it touched $4.31 a bushel, up five cents on the day. But the doubling of corn, a main feedstock for US ethanol producers, over the past year at a time when oil prices are at the same level they were 12 months ago has raised questions over the viability of the biofuels industry without heavy government support.

Take warning, right?

"“If you’re on the right side of the issue, just keep driving until you hear breaking glass. Don’t quit.”" - T. Boone Pickens.

Bio-Fuels are viable when recycling previously processed fuel stock, like fryer grease or methane decomposing from garbage heaps.

Other than that, and in particular, when using corn as a feedstock, Bio-Fuels are completely bonkers and doomed to fail, like every other half-witted perpetual motion machine that has come down the pike.

And now, the evidence is coming in to support the arithmetic, on account of all the fools who ignored the arithmetic. The dead metaphor being, this stuff ain't rocket science. Go ahead. Pour what is left of the midwestern topsoil into a six cylinder energy sink. Jerk.

Also re-iterated here is the fact that money is irrelevant when energy runs to depletion. Energy defines money, not the other way around. The capacity existing to achieve industrial goals, like laundering useful energy into corn, and then back out again, is dependant not on government "subsidies" but rather government "energy".

For now, you can still buy gasoline for 3 dollars a gallon or less in the U.S., but watch the markets this week. The shift underway might well be seismic. China just threw down on our t-bills.

And finally, one house-keeping note - Sorry for my extended absence. I had the flu, and it really sucked. But guess what - - it turns out not to have been bird flu, and thus I'm back on the horse. Not dead yet! Thus, I am not a bee.


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