Trains.com

OT - Will US Ethanol Mandates Trigger global food riots?

6014 views
107 replies
1 rating 2 rating 3 rating 4 rating 5 rating
  • Member since
    December 2001
  • From: Smoggy L.A.
  • 10,743 posts
Posted by vsmith on Tuesday, January 30, 2007 3:58 PM
If no one likes the solar powered trolley idea....how about wind powered monorails?Big Smile [:D]

   Have fun with your trains

  • Member since
    August 2006
  • 72 posts
Posted by Suburban Station on Tuesday, January 30, 2007 4:15 PM
 zugmann wrote:

Ethanol is not the proverbial silver bullet.  There is no silver bullet for our energy needs.  But ethanol may be a part of the solution.  (and being a home grown fuel is an advantage to this american).  So what if it is subsidized - there are so many other things in our country so oversubsidized, I can not get all worked up about ethanol.  Unfortunately, this country will only really address their energy problems when the price goes sky-high.  When it levels off, many new initiatives will be abandoned if not for the continuous influx of government money.

it's a problem if you are subsidizing something that

1) makes the energy problem worse

2) makes food more expensive

3)causes a better unssubsidized alternative to be overlooked

  • Member since
    September 2006
  • From: Mt. Fuji
  • 1,840 posts
Posted by Datafever on Tuesday, January 30, 2007 4:18 PM
 Suburban Station wrote:

3)causes a better unssubsidized alternative to be overlooked

Are you suggesting that there is an energy alternative that is currently being overlooked that would not need subsidization to be profitable? 

"I'm sittin' in a railway station, Got a ticket for my destination..."
  • Member since
    July 2005
  • From: In the New York Soviet Socialist Republic!
  • 1,391 posts
Posted by PBenham on Tuesday, January 30, 2007 4:20 PM
 vsmith wrote:
If no one likes the solar powered trolley idea....how about wind powered monorails?Big Smile [:D]

I can think of five places that would be perfect for the wind powered monorails. Albany NYSSR, Austin, TX, Boston, MASSR, Sacramento, CA, and Washington DC! Close, but no cigar:Columbus, OH, Harrisburg, PA, Lansing, MI, Springfield, IL (Home of the world's only RS1325s)Talahassee, FL, and Montpielier, VT!Whistling [:-^]

  • Member since
    December 2001
  • From: Smoggy L.A.
  • 10,743 posts
Posted by vsmith on Tuesday, January 30, 2007 4:28 PM
 PBenham wrote:
 vsmith wrote:
If no one likes the solar powered trolley idea....how about wind powered monorails?Big Smile [:D]

I can think of five places that would be perfect for the wind powered monorails. Albany NYSSR, Austin, TX, Boston, MASSR, Sacramento, CA, and Washington DC! Close, but no cigar:Columbus, OH, Harrisburg, PA, Lansing, MI, Springfield, IL (Home of the world's only RS1325s)Talahassee, FL, and Montpielier, VT!Whistling [:-^]

Care to invest in the technology? Just send your checks to my holding complany in Nigeria and...Big Smile [:D]

   Have fun with your trains

  • Member since
    May 2006
  • From: Richmond, VA
  • 200 posts
Posted by penncentral2002 on Tuesday, January 30, 2007 4:34 PM
 PBenham wrote:
 vsmith wrote:
If no one likes the solar powered trolley idea....how about wind powered monorails?Big Smile [:D]

I can think of five places that would be perfect for the wind powered monorails. Albany NYSSR, Austin, TX, Boston, MASSR, Sacramento, CA, and Washington DC! Close, but no cigar:Columbus, OH, Harrisburg, PA, Lansing, MI, Springfield, IL (Home of the world's only RS1325s)Talahassee, FL, and Montpielier, VT!Whistling [:-^]

While Washington, DC would seem to be perfect for wind powered monorails, there is the possibility that the power source of wind would be so great that braking would be impossible!

Zack http://penncentral2002.rrpicturearchives.net/
  • Member since
    July 2006
  • From: Aledo IL
  • 1,728 posts
Posted by spokyone on Tuesday, January 30, 2007 4:38 PM
 RRKen wrote:

 BNSFrailfan wrote:
Ethanol sucks big time. It may be cleaner but it does nothing for gas milage. I burn 10 times more gas with this ethanol junk than Regular gas.

 Gee, it's made in your back yard, provides jobs for your neighbors, pays taxes, adds value to the corn your rural neighbors produce.    Several things you can do to improve milage.  Cleaning the injectors oxygen sensor make the biggest impact.   Your average loss due to the smaller BTU numbers should be about 5-10%.  

Ken. If we add 10% ethanol to our gasoline, and we lose 10% fuel milage, I think the only benefit we see is less polutants at the tailpipe. I Googled for ethanol research. I found studies that claim a 67% energy increase to produce a gallon of ethanol. Others claim 25% increase. Then this one by Cornell and Berkely that show negative increase.
http://www.msnbc.msn.com/id/8607389/ This is older, but newer than the Minnesota study. So I am confused by all of this.
My 96 Dodge Ram loses 5% mpg. A new Toyota Matrix show only a 2% decrease when using ethanol. This difference is too little to measure accurately.

I really want to learn more about recent advances in the production of ethanol.

  • Member since
    May 2004
  • From: Mason City, Iowa
  • 901 posts
Posted by RRKen on Tuesday, January 30, 2007 7:16 PM
 spokyone wrote:
   Ken. If we add 10% ethanol to our gasoline, and we lose 10% fuel milage, I think the only benefit we see is less polutants at the tailpipe. I Googled for ethanol research. I found studies that claim a 67% energy increase to produce a gallon of ethanol. Others claim 25% increase. Then this one by Cornell and Berkely that show negative increase.
http://www.msnbc.msn.com/id/8607389/ This is older, but newer than the Minnesota study. So I am confused by all of this.
My 96 Dodge Ram loses 5% mpg. A new Toyota Matrix show only a 2% decrease when using ethanol. This difference is too little to measure accurately.

I really want to learn more about recent advances in the production of ethanol.

First off, Dr. Pimentel's research at Cornell was based on Ag practices from 1979 and earlier. As an example, farmers now a days use manure as a fertilizer instead of other sources of nitrogen.  Second it was his assumption that all farmers used irrigation, which plainly they do not.   Third his basis for ethanol production process is quite out of date.   Modern dry mill plants are quite efficient. 

  1. Water consumption has been cut by recycling water in both process and fermentation.   Water use has been a major issue in many communities.  Anerobic Bio-Methanators takes the contaminants from the water, converts it to methane, and sends it to the driers to supplant fuel used there. Water is then sent back to the fermentation process.
  2. Fuel used to power the driers, now can be used for heat in the fermentation process.  Meaning the driers, which both dry the DDGs and eliminate the release of VOC's, produce steam to heat the fermentation tanks up to 210°.  
  3. Coal is being used in several new plants to replace natural gas. Coal use can cut fuel costs to a plant by one third.   Two plants are using bio-mass for process heat.  One using wood chips, has eliminated natural gas consumption at the plant.  The other using stillage on a fluidized bed boiler, which has reduced natural gas consumption by 54%.  That same plant is installing two 2.1 megawatt wind towers from Deere & Co. producing 40% of their needs.  They look to stop using commercial power in the future.
  4. Plans are still underway to place processes in several plants that can remove corn oil from DDGs without removing the nutrients that make it such an excellant cattle feed.  This will add another byproduct and revenue stream. 

There is a new paper out by the National Renewable Energy Laboratory I have yet to digest.  In it they go further in bio-mass to ethanol processes.   Coal use in Ethanol plants has been approved by MN, IL, IA, OH, and TN.   Anerobic Bio-Methanators have been approved in NE, IA, MN, OH, IL, IN and TN. 

I have found so much research on-going I cannot keep up with it.   Stay tuned.

I never drink water. I'm afraid it will become habit-forming.
W. C. Fields
I never met a Moderator I liked
  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Tuesday, January 30, 2007 8:22 PM
 Way of the Wolf wrote:

Coal and oil are not renewable which means that in time we will run out

Not necessarily.....

http://en.wikipedia.org/wiki/Abiogenic_petroleum_origin

Thus, if we ever "run out" of hydrocarbon fuels, it'll be for political reasons, not because of physical limitations.

  • Member since
    August 2006
  • 72 posts
Posted by Suburban Station on Wednesday, January 31, 2007 11:21 AM
 StillGrande wrote:
 

 Brazil is now self sufficient in enegy.  Last year they exported 600,000 barrels of ethanol to the US.  They expect to increase this to 2.1 million barrels this year. 

Using brazil as a model example is misleading at best, IMO, for the following reasons:

1) It's a largely undeveloped country with much smaller energy needs. Much of Brazil only recently got access to fresh water (not in their homes, but nearby).

2) It has led to spikes in food costs, although whether this is a long term or short term phenomenon is not clear.

3) Sugar is cheaper to use for ethanol than corn, which is what I'm opposing here (I'm not against viable forms of alternative fuels, I just don't think that corn based ethanol is it and there's very little evidence that it is). Worse, farming is one fo the top contributors to pollution. Kind of like American outsourced much of its manufacturing (and therefore pollution), drivers woudl merely be outsourcing pollution to farms. Most research seems to point at a net loss of energy for the process.

4) If market forces in ethanol woudl be allwoed to work, we wouldn't buy corn but import ethanol from Brazil (not that I'm arguing that importing ethanol from Brazil isn't preferrable to importing oil from venezuela and the middle east but it wouldn;t benefit Archer Daniels Midland or RRKen's other friends, so we stamp a 54 cent per per gallon tariff on imports. What's the purpose here? improving the environment or providing the cornbelt with welfare?

 

 

 StillGrande wrote:
 

 The ethanol industry can actually get more product out of the rest of the corn plant than the seed corn head.  The real target is switch grasses, which are something like 8 times more efficient for production. 

As mentioned earlier, other forms of alternative fuels may eventually be the answer, corn based ethanol is pure politics (not that sugar wasn't in brazil, it just happens to be a better source than corn).

 

 StillGrande wrote:
 The US has cut subsidies for corn from $8.1 billion to $2 billion this year.  If prices remain high, they expect to be able to cut the subsidy this year almost entirely, which would also end complaints from several nations who complain about the price assistance US growers get. 

Let's start with subsidies. A subsidy was developed to help a farmer make up money lost between the cost to produce a product, and the higher market cost. For example, if it cost me 1 dollar to grow a bushel of corn, and the market demanded only 80 cents, the government would make up the difference and pay me 20 cents, plus a little more so that I can make a profit and give me a reason to keep growing corn. A nice idea in theory, but in practice it essentially ends up paying a farmer both when they produce too much and when their crop prices are too low. As anyone with a passing grade in Econ 101 can tell you, making too much of a product is one cause of lower prices, the government ends up giving out a lot of money. To the cost of $22.7 billion in 2005.

http://www.accidentalhedonist.com/index.php/2006/01/24/tariffs_and_subsidies_the_literal_cost_o

It also has a good rundown of how the sugar tariff works. Additionally, when referring to reduced corn tariffs you need to account for subsidies paid for ethanol and sugar.

 

 StillGrande wrote:
 $350 billion sent to people who hate us could be redirected to fuels we make here as alternatives are developed. 

or deficit reduction but that won't happen. many people hate us because of the money we send. the drug war. propping up unpopular governments because we prefer them. Only an American coudl be baffled as to why peopel hate us. We give them money, they shoudl kiss our ***. (of course, we borrowed the money, we didn't make it).

 StillGrande wrote:
 Sure there will be other products which will be impacted, but do you really need to use corn syrup as a sweetener in everything.  There are alternative products. 

yeah, like sugar which ADM and co have been artificially keeping out of the market for years. (although honestly, we've been dabbling in sugar tariffs since 1873 but the switch to HFCS happened in the 1970's, I posted a blurb on that already). So, the same lobby that keeps us form buying cheaper ethanol, keeps us from using real sugar in our products.

 StillGrande wrote:
  The big cost for anything new is the startup.  Have to build the infrastructure. 
which is why it's important not to blow our wad on the wrong product.

  • Member since
    July 2002
  • From: A State of Humidity
  • 2,441 posts
Posted by wallyworld on Wednesday, January 31, 2007 11:36 AM
"North Dakota Biodiesel Inc. plans to build a $50 million biodiesel manufacturing plant in Minot, North Dakota, drawing on local canola crops as a source, said an article posted on the US Department of Energy's Web site (www.energy.gov/engine/content.do).

The facility will be the largest biodiesel refinery in North America, able to produce 100,000 tonnes of premium biodiesel annually from more than 355,000 acres (144,000 hectares) of canola. Construction on the plant is expected to begin in August, with the first sale of biodiesel products likely in December 2006.

Union Pacific, the largest US railroad, plans to nearly double its annual tonnage of ethanol shipments by 2008, a company official said in May.

Jerry Finan, senior product manager for corn refining at Union Pacific Railroad (UP), told a an ethanol industry conference that UP expects to transport 2.8 billion gallons of ethanol a year by 2008. It currently transports 1.5-1.7 billion gallons per year, he said. "

 

Nothing is more fairly distributed than common sense: no one thinks he needs more of it than he already has.

  • Member since
    May 2004
  • From: Mason City, Iowa
  • 901 posts
Posted by RRKen on Wednesday, January 31, 2007 3:47 PM
 wallyworld wrote:
Union Pacific, the largest US railroad, plans to nearly double its annual tonnage of ethanol shipments by 2008, a company official said in May.

Jerry Finan, senior product manager for corn refining at Union Pacific Railroad (UP), told a an ethanol industry conference that UP expects to transport 2.8 billion gallons of ethanol a year by 2008. It currently transports 1.5-1.7 billion gallons per year, he said. "

 I can see that happening quite easy.  There is a lot of competition from CN, BNSF, and regionals for this traffic.  Rates, infrastructure, and service will all be the deciding factor.   It is not the plants which cause this, but the Marketers who pit carrier versus carrier to maintain their competitive edge against the other Marketers.

 UP's Iowa/Minnesota district is the place where this is really happening.   And I know every person who works the jobs that service these plants, know darn well what can happen if they do not give the customer what they need, within reason.  The options for the producers are easy, too easy to divert traffic, and our jobs all depend upon them.  Just as their jobs depend upon us getting it right the first time in the yard and on the locals.   We have all watched this industry grow from nothing, and would be very upset to see any of it go away, for any reason.    

I never drink water. I'm afraid it will become habit-forming.
W. C. Fields
I never met a Moderator I liked
  • Member since
    May 2004
  • From: Mason City, Iowa
  • 901 posts
Posted by RRKen on Wednesday, January 31, 2007 5:33 PM
 Suburban Station wrote:
4) If market forces in ethanol woudl be allwoed to work, we wouldn't buy corn but import ethanol from Brazil (not that I'm arguing that importing ethanol from Brazil isn't preferrable to importing oil from venezuela and the middle east but it wouldn;t benefit Archer Daniels Midland or RRKen's other friends, so we stamp a 54 cent per per gallon tariff on imports. What's the purpose here? improving the environment or providing the cornbelt with welfare?

Guess you did understand one word I put to this thread. 

 Suburban Station wrote:
As mentioned earlier, other forms of alternative fuels may eventually be the answer, corn based ethanol is pure politics.
 

 We had/have more corn than beets or cane.  The technology followed existing available feed stocks.   It was ready and waiting and did not have to wait for research and development.  

 

 Suburban Station wrote:
  The US has cut subsidies for corn from $8.1 billion to $2 billion this year.  If prices remain high, they expect to be able to cut the subsidy this year almost entirely, which would also end complaints from several nations who complain about the price assistance US growers get.

Let's start with subsidies. A subsidy was developed to help a farmer make up money lost between the cost to produce a product, and the higher market cost. For example, if it cost me 1 dollar to grow a bushel of corn, and the market demanded only 80 cents, the government would make up the difference and pay me 20 cents, plus a little more so that I can make a profit and give me a reason to keep growing corn. A nice idea in theory, but in practice it essentially ends up paying a farmer both when they produce too much and when their crop prices are too low. As anyone with a passing grade in Econ 101 can tell you, making too much of a product is one cause of lower prices, the government ends up giving out a lot of money. To the cost of $22.7 billion in 2005.

Not sure why you link corn directly to ethanol, since as a base commodity, if not sold to a plant,  corn would sell eleswhere.   Year 2005 saw supports go down to $8.6 million, the five year trend has been a steady downward move.   This follows the trend in higher corn yields and prices. 

 Again I go back to the premis, if a farmer knew in advance what to plant and how much, not to mention the weather in that growing season, we would not need these programs. But the farmer needs income every year in order to survive, and to skip a year or two because stocks are too high in one commodity or another, is folly.   Since the loans on the land, equipment and such do not go away because the producer cannot make a living off the current prices.  What then?  I am not talking about giving away the bank either.

 

 Suburban Station wrote:
 Sure there will be other products which will be impacted, but do you really need to use corn syrup as a sweetener in everything.  There are alternative products. 

yeah, like sugar which ADM and co have been artificially keeping out of the market for years. (although honestly, we've been dabbling in sugar tariffs since 1873 but the switch to HFCS happened in the 1970's, I posted a blurb on that already). So, the same lobby that keeps us form buying cheaper ethanol, keeps us from using real sugar in our products.

I offer this from the USDA late last year:

Factors impacting
sugar to ethanol viability

Corn is currently the least-cost feedstock available for ethanol production. Ethanol from sugarcane or sugar beet feedstocks costs twice as much. USDA's recent sugar/ethanol report provides these comparative production costs.

 Suburban Station wrote:
The big cost for anything new is the startup.  Have to build the infrastructure. 
which is why it's important not to blow our wad on the wrong product.

I am sure as there has been billions of dollars of private money invested in corn Ethanol, there will be more for cellulostic Ethanol, F-T fuels, and other alternative sources of energy. 

 Suburban Station wrote:
  Most research seems to point at a net loss of energy for the process.
 

Sorry, there are so many holes in the so-called research from Pimentel & Company, that it is a laugh to even bring it up.   Old data, lack of understanding of currnet farming practices (only 15% of corn acres use irrigation, which Pimentel bases his costs upon), and current efficiencies in dry mill plants, not wet mill types that such research has based upon.   81% of Ethanol produced in the U.S. is from dry mill type plants.  

 

Folks, what I have put forth here is the reality I see every day about farming and the Ethanol industry.  I have spent years reading pro and con about it, talking with producers, people in the industry, and marketing types.   As someone said in an earlier post, Ethanol is not perfect by any means.  However it is here and now, not something that we have to wait 5, 10, or even 15 years for.   It easily replaces MBTE which was banned for ground water issues.   And as was posted today, it also helps my employer, and fellow employees.   Yet in talking about this industry, I have to step back from my wallet, and look objectively and balance all that is out there.   I make those decisions, based not on "my friends", or some industry shill, but my own thoughtful observations.   In none of what I have written, except to provide direct quotations, have I referred to the pile of documentation I have or the internet.  

I never drink water. I'm afraid it will become habit-forming.
W. C. Fields
I never met a Moderator I liked
  • Member since
    August 2006
  • 72 posts
Posted by Suburban Station on Wednesday, January 31, 2007 6:03 PM

Note: I just saw your post in regards to the Pimental piece. If you thought I didn't read that post, you were correct.  

 RRKen wrote:
 We had/have more corn than beets or cane.  The technology followed existing available feed stocks.   It was ready and waiting and did not have to wait for research and development.  

as opposed to cane already being used? does not compute. and jsut because something is there, doesn't make it a godo idea to use it. I have a gun, that doesn't mean I shoudl take the law into my own hands.

 

 RRKen wrote:
Not sure why you link corn directly to ethanol, since as a base commodity, if not sold to a plant,  corn would sell eleswhere.   Year 2005 saw supports go down to $8.6 million, the five year trend has been a steady downward move.   This follows the trend in higher corn yields and prices. 
probably because corn based ethanol=US ethanol, AFAIK.

 RRKen wrote:
I offer this from the USDA late last year:

Factors impacting
sugar to ethanol viability

Corn is currently the least-cost feedstock available for ethanol production. Ethanol from sugarcane or sugar beet feedstocks costs twice as much. USDA's recent sugar/ethanol report provides these comparative production costs.

the one and the same USDA in charge of setting sugar import quotas effectively setting the price of sugar? If this is true, why the 54 cent per gal tariff?

If what you implied and used the USDA is true, then there is no need for imported ethanol tariffs (or sugar guarantees-(if other than ensuring that southern sugar farmers remains multimillionaires) and it will solve our "corn problem-(paying people to grow corn we don't need). I have not seen such research. However, that of course woudl alleviate my concerns about corn ethanol. Please post these studies when they come out, although I hope they make the news. However, these are my concerns...

Ethanol cost $2.04 a gallon in the United States on Jan. 17, based on data from wholesale distributors in Des Moines, Iowa, and other Midwest locations, 41 per cent more than unleaded gasoline, before taxes. What's more, ethanol produces only 70 per cent as much energy as petroleum....

The U.S. government gives refiners and wholesalers a 51-cent tax break for every gallon of ethanol that's blended with gasoline. To limit supplies and bolster prices, a 54-cent-a-gallon U.S. tariff on imports blocks shipments from countries outside the Caribbean and Central America.

http://www.theglobeandmail.com/servlet/story/LAC.20070130.RETHANOL30/TPStory/Business

  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Wednesday, January 31, 2007 6:16 PM

 StillGrande wrote:

Brazil is now self sufficient in enegy.  Last year they exported 600,000 barrels of ethanol to the US.  They expect to increase this to 2.1 million barrels this year. 

I think there is a bit of a misperception being generally put forth in the celebration of Brazil's so-called energy self sufficiency.  I have heard that Brazil has recently installed the world's largest offshore oil drilling platform with the capacity to provide the country with 100% of of its energy needs from oil.  Others may refute or varify this.  They may be a pioneer in sugar cane ethanol, but they are not self sufficient with it.  

  • Member since
    September 2003
  • From: California - moved to North Carolina 2018
  • 4,422 posts
Posted by DSchmitt on Wednesday, January 31, 2007 9:54 PM
 Bucyrus wrote:

 StillGrande wrote:

Brazil is now self sufficient in enegy.  Last year they exported 600,000 barrels of ethanol to the US.  They expect to increase this to 2.1 million barrels this year. 

I think there is a bit of a misperception being generally put forth in the celebration of Brazil's so-called energy self sufficiency.  I have heard that Brazil has recently installed the world's largest offshore oil drilling platform with the capacity to provide the country with 100% of of its energy needs from oil.  Others may refute or varify this.  They may be a pioneer in sugar cane ethanol, but they are not self sufficient with it.  

I doubt that they are trying to (or could) provide 100% of their energy needs with oil.  They do however subsidize their ethanal economy with oil.  They set an artifically low price for the ethanol used in Brazil and a high price for the gasolene.  They also subsidize the ethanol economy with foreign oil sales.  At one point, some years ago, when oil prices dropped, the Brazilian economy was in dire straights until the oil prices increased again.   

By the way, Environmentalists, much of the devistation of the Rain Forests has been due to converting the land to sugarcane production.

However, according to this artlcle they may have learned from past mistakes:

http://www.climateark.org/shared/reader/welcome.aspx?linkid=55870

Here is a contrary view, from a citizen not a scientest:

 http://www.lewrockwell.com/orig7/desousa1.html

By the way he has railroad maps of Brazil on his website.  The links to them on his English site aren't working but the links on his Porguese site are.  There are railroad photo too.

 

I tried to sell my two cents worth, but no one would give me a plug nickel for it.

I don't have a leg to stand on.

  • Member since
    January 2003
  • From: Kenosha, WI
  • 6,567 posts
Posted by zardoz on Monday, February 5, 2007 10:24 AM
 RRKen wrote:
 wallyworld wrote:
Union Pacific, the largest US railroad, plans to nearly double its annual tonnage of ethanol shipments by 2008, a company official said in May.

Jerry Finan, senior product manager for corn refining at Union Pacific Railroad (UP), told a an ethanol industry conference that UP expects to transport 2.8 billion gallons of ethanol a year by 2008. It currently transports 1.5-1.7 billion gallons per year, he said. "

 I can see that happening quite easy.  There is a lot of competition from CN, BNSF, and regionals for this traffic.  Rates, infrastructure, and service will all be the deciding factor.   It is not the plants which cause this, but the Marketers who pit carrier versus carrier to maintain their competitive edge against the other Marketers.

 UP's Iowa/Minnesota district is the place where this is really happening.   And I know every person who works the jobs that service these plants, know darn well what can happen if they do not give the customer what they need, within reason.  The options for the producers are easy, too easy to divert traffic, and our jobs all depend upon them.  Just as their jobs depend upon us getting it right the first time in the yard and on the locals.   We have all watched this industry grow from nothing, and would be very upset to see any of it go away, for any reason. 

(highlights mine)

Like the corn it's made from, ethanol is largely a product of the small-town Midwest, distilled in places like Nevada, Iowa, and shipped to market by train.

Now, as ethanol producers ramp up production, they are straining railroads already taxed by burgeoning shipments of coal, containers and grain. And they worry that the transportation crunch could make it difficult for ethanol, despite its surge of support in Washington, to compete with energy rivals.

Rail and transportation logistics for the ethanol industry is "the mountain to climb ... as we go forward," says Ken Eriksen, a senior vice president of Informa Economics Inc., an agricultural and renewable fuels consulting firm in Memphis, Tenn.

Unlike gasoline, natural gas and oil, ethanol attracts water and other chemicals, so it can't be sent through the long-established pipelines that move those fuels. That means the ethanol industry has been forced into a marriage with the already groaning railroads.

"It's supply and demand," says Walt Wendland, president and CEO of Golden Grain Energy LLC in Mason City, Iowa. "We're a captive market for them."

Few people think the strains will derail the boom, fueled first when it became a popular replacement for the gasoline additive methyl tertiary-butyl ether (MTBE) and boosted by President Bush's call for more homegrown energy alternatives. But ethanol's popularity has meant that producers have had to struggle to upgrade their rail yards and secure enough tank and grain cars to efficiently ship both ethanol and its byproducts. Railroads are prodding them to make the changes while also rushing to expand their own tracks and freight yards to handle the increasing shipments. Even though some parts of the economy have slowed recently, rail freight volumes are still near record highs.

Despite the concern about the rail system, producers aren't flocking to the waterways. Barges are considered too slow to handle ethanol's rush to market, most plants aren't located near bodies of water and other liquid commodities already have soaked up the majority of the tank-barge capacity.

Railroad executives say ethanol, though still a small part of their total freight traffic, promises to be a lucrative growth opportunity. Shipments of ethanol have nearly tripled since 2001 to about 106,000 rail carloads last year and are projected to increase to at least 140,000 in 2007, according to the Association of American Railroads in Washington. Each tank car has a capacity of 30,000 gallons.

"We had a hiccup here and there, absolutely," says David Lawson, vice president of industrial products at Norfolk Southern Corp., a large railroad based in Norfolk, Va. "But we feel like we handled the growth very well."

Railroads have been pushing producers toward shipping by longer, more-efficient trains, called unit trains. Such trains carry 75 to 95 tank cars of ethanol and provide a faster and more economical alternative to shipping a few ethanol cars at a time. Burlington Northern Santa Fe Corp. in October 2003 began running its Ethanol Express to shuttle ethanol to California from the Midwest. It now runs two to three times a week. But some producers have chafed under the industry's initiatives.

After the corn is distilled into ethanol, it's mixed with a small amount of gasoline at the production plant before being shipped by train to a petroleum terminal, where it is blended with gasoline. Large petroleum terminals are accustomed to receiving their product by pipeline and then distributing locally by truck. Most terminals haven't developed the infrastructure of tracks, storage tanks and rapid unloading to receive ethanol by unit trains, says Kevin Kaufman, group vice president of agricultural products of BNSF's rail unit. Expanding is difficult because they are sometimes hemmed in by buildings, highways and bodies of water.

On the other end of the line in ethanol country, many of the producing plants aren't large enough or lack the track and facilities to fill unit trains themselves. That is forcing the producers to shell out millions on tracks and equipment they hadn't planned to spend. Engineers from rail giant Union Pacific Corp. in Omaha, Neb., are requiring Mr. Wendland to triple the size of Golden Grain's rail yard even though he is only doubling the size of the 65 million-gallon ethanol plant in land-locked Mason City.

The 24,000-foot track expansion will push him over his $2 million budget by $1.5 million. He also had to purchase 55 acres of nearby land for $500,000. Mr. Wendland says Union Pacific told him their freight yards were too strapped for space to store his cars, so he'll have to store them himself. "It's a huge commitment, to say the least," he says. The railroad confirmed Mr. Wendland's account.

Lately, large railroads have used their newfound market power to raise prices on many commodities they carry. For producers it comes at a time when high corn prices are squeezing their margins.

To cope with the price increases, Rick Brehm has started packing tight every car of distillers dried grain, an ethanol byproduct sold as cattle feed, he ships out. The 50-million-gallon-a-year Lincolnway Energy LLC ethanol plant in Nevada, Iowa, sits beside Union Pacific's mainline. Mr. Brehm is having an employee shovel the grain into every corner of his rail cars. That way he can fill up an extra 3 percent to 4 percent of space that was lost to air pockets before.

Union Pacific is ratcheting up investment to expand its own yards and track lines to handle the extra shipments in ethanol producing areas in Iowa, Minnesota a

  • Member since
    May 2004
  • From: Mason City, Iowa
  • 901 posts
Posted by RRKen on Monday, February 5, 2007 1:36 PM

Good post Zardof.   Being able to keep my eye on things, transit times have been quite good for units to Sewaren and Albany.   I am sure UP could do better with trains to Peach, TX, but it is not horrible.   The empties however from TX are doing quite well, and they came up with an innovative way to parcel them out at an intermediate station north of Ft. Worth.  This allows the Marketing company rebill empties where they need them.   Right now they use two stations, Harrington, KS and Council Bluffs, IA.   From there if they are singles, they go out as such.   However units tend to stay together.  

 A round trip from Minnesota/Iowa to Sewaren takes 10 to 11 days from release in Lake Chrystal / Hanlontown, unloading at Swearen, and spotting empties back to Lake Chrystal / Hanlontown.   Singles can take longer, especially if there is an interchange involved.   As an example, UP Ashton, IA to Council Bluffs, then via BNSF to Watson, CA.     On top of that, end terminals have had their share of issues, one such case resulting in an embargo because of the backlog of cars.   During that time, cars billed out from the plant would wait days to be pulled due to those backlogs.   I believe that has been since fixed.  

 

And your item about Golden Grain is quite true.   We have not the terminal facilities to hold cars for them.   For one industry to hold 40 tanks in our 16 track yard, is asking too much (sometimes more).  I do believe however the Iowa Northern Project will help with capacity issues at both Golden Grain as well as Lakota.  (both stations are cramped for track capacity.)

I never drink water. I'm afraid it will become habit-forming.
W. C. Fields
I never met a Moderator I liked

Join our Community!

Our community is FREE to join. To participate you must either login or register for an account.

Search the Community

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy