In 2005, our Federal Government created a law mandating the usage of 5 billion gallons of ethanol. This rises to 9 billion gallons in 2012 and is to reach 36 billion gallons in 2022. Before the government created an ethanol mandate insuring a market, a blending subsidy to big oil companies to insure delivery, and a tariff to eliminate ethanol imports, I think we should have had to prove the energy viability of the industry.
We should conduct a study in South Dakota asking the following questions.
1. If South Dakota was a closed system, meaning we only produced ethanol out of all the corn we grew, how much ethanol could we produce?
2. How many BTU's of energy would that equate to?
3. How much energy would it have taken to produce it?
It is easy to determine the answer to the first two questions.
South Dakota planted 4.5 million acres of corn in 2007 which averaged 121 bushels per acre. The total bushels harvested was 544.5 million bushels which would produce 1.415 billion gallons of ethanol. There are 76,000 BTU's for every gallon of ethanol creating a total of 41.382 trillion BTU's produced in South Dakota through energy.
What the USDA is saying is that to produce 41.382 trillion BTU's of energy, it took 24.78 trillion BTU's to produce that energy. I think we should have a clear understanding of the exact number. Here is the guidelines we should use in order to determine if that is accurate.
We should consider the following inputs for this study.
1. Pre Planting Expenses
a. the seeds to plant (from previous year at seed corn company)
i. should include all energy costs associated with breeding and creating the hybrid corn
ii. energy costs to produce the machinery, fertilizer, pesticides, herbicides to produce the planted seed corn.
iii. energy costs of the irrigation, planting, tilling, harvesting of the seed corn
iv. energy costs of drying and transportation of the seed corn
vi. energy costs of delivery to farmers
b. the creation of the business of farming
i. personal usage of gasoline for all business related expenses for entire industry, including farmers, bankers, government officials, corn councils, etc, including trips to FSA offices, business trips to purchase new machinery, banks, meetings, etc.
c. machinery.
i. production costs (number of farmers equals the number of tractors/combines/planters, etc.
ii. delivery (these would come from Illinois, in case of John Deere, and would require additional people to assemble at each dealership)
iii. middleman such as John Deere or Case IH--as well as all of their energy usage.
iv. repair and or depreciation of equipment from year to year (each of the industry workers including hedge traders, etc. for business mileage and energy usage)
2. Planting Expenses--again, all of the above, plus
a. Diesel for all engines
b. Gasoline for all automobiles used in purpose of business
c. electricity for all dryers, etc.
d. natural gas for all heat for shops and personal homes excluding personal vacations and/or usage
3. Ethanol Plants-construction
a. Costs to construct
i. energy to produce concrete, steel and all associated materials
ii. usage for all associated laborers for business related to industry for all gasoline for laborers, and temporary housing including cost of air conditioning or heating.
iii. all energy costs for services below ground including piping and digging
iv. all energy costs to create infrastructure for rail/transportation
4. Ethanol Production
a. Energy Costs to transport corn to ethanol plants
b. all natural gas, diesel, gasoline for all aspects of production
i. include energy cost of water used and any depreciation of assets associated
ii. include energy cost for drying
iv. include cost of energy to produce all forms of carbon energy
c. include energy consumption of laborers necessary to run all the plants and all people associated with this energy cycle
5. Marketing, Sales and Government Relations
a. all aspects of marketing including all trips to Washington to secure the funding for ethanol of all the lobbyists, all fundraising and event planning, etc.
b. All airline miles/energy usage and gasoline usage to sell
c. all associated costs of housing/food preparation while on road
6. Delivery
a. all costs with setting up delivery system including rail and rail cars, trucks and tankers
b. diesel for all delivery
c. maintenance of all systems associated
7. The cost of blending, including the creation and upkeep of additional storage tanks at blenders operations and portions of hauling/shipping to final destination
Once, we have a numerical number of BTU's to create ethanol, we would have to subtract out the associated costs of energy for the creation of ethanol byproducts.
If this is an accurate representation of the energy it would take to create ethanol, I would expect that for every 1 unit of energy put into the system, we would we be able to continually produce 1.67 units.
It seems like there is a lot of energy going into the system. I look forward to finding out how much is coming out.
My father sold seed corn to farmers and travelled 40,000 miles per year. I would expect that all of the energy he consumed, in order to provide seed to plant, would be included in the total. For every person like my father, there would be hundreds of other salespeople that should be included, such as insurance man, implement dealers, etc. that would be calling on a farmer. These, too should be included in the formula.
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