This message was sent out twice earlier, but was apparently lost in cyber-space both times... since it is not in the archives, so I expanded it into a more inclusive “anti-oil" rag. Apologies for the overload, if they all come in at the same time.
This is one of the few kinds of rants that goes over well here on vortex, but if you are inclined to support these thieves, Big Oil, then set your SPAM filters accordingly. I'm hoping they do not have their greedy little tentacles into Eskimo.com ;-) Despite the predictable run-up in gasoline pump prices (to about $3 gallon in CA) … as has happened for decades during the peak driving months (the bump in price) … there are some gloomy days ahead for Big Oil. Time to short sell? Dunno, but there are some shenanigans going on in the futures market for oil. http://www.bloomberg.com/apps/news?pid=20601087&sid=a1.QbgWdF8aY … which would make it appear (if you are a cynic) that the big players (BOO) want to eliminate the smaller players in this market, who may turn out to be spoilers for their own coordinated attempt at market manipulation. The message: “only the big players like us are permitted to manipulate the oil market.” Signed, the BOO Trust. For eight straight months, going back to Bush’s last days, oil supplies have been running about 2 million barrels a day higher than the demand. That includes June. Eventually, and as early as August, it is suspected that the middle level wholesalers and dealers will finally revolt for the "fix" since they bear much of the burden of paying to store the massive surplus of higher priced refined fuel, and they will begin to flood the market. One expert says that this " is the largest and longest continuous glut of supply that I have seen in 30 years of following energy prices. It's a huge surplus. There has never been anything like it." One might then reasonably ask then – how could the industry pull off the traditional “summertime gouge”? And even more importantly, why has the futures market NOT plummeted, already like it should have with such a glut and with the corn harvest ready to come in? First, there is the “tradition” – sad to say, in the sense that there is the consumer expectation of higher prices during summer, so some of the rise which has occurred, in the face of the glut, could be more easily manipulated and tolerated, outside of normal supply/demand forces. Plus the rise offsets the *artificially low* price a few months earlier, which was purposeful. That is to say, since BigOil since had already managed to manipulate prices downward, they needed the balancing act to maintain their shareholders confidence. Months earlier, before the US grain planting season, and in order to partially curb the rise in ethanol production to some extent they were meddling and price fixing on the downside. Many ethanol producers were forced into bankruptcy in the Spring - but – surprise, surprise … the industry consolidated and capacity was actually added, in recent months. "Deep-pocket producers" like Cargill and Archer Daniels Midland and several other new players, some with oil connections, were on the lookout for distressed ehtanol plants, which they picked up "on the cheap" during the financial meltdown. AFAIK, not a single ethanol plant was actually taken off-line. IOW, it seems to me that the BOO strategy (BOO is the carefully-disguised illegal trust consisting of big oil and opec) was NOT as successful as they had planned. Instead of lowering ethanol capacity, or scaring farmers away, they ended up helping to consolidate the ethanol industry - and this prior price fixing strateyg might backfire, since it gives a larger “voice” politically to ethanol, combined with the already strong farm lobby. Yes, the corn planting acreage was reduced this year, but there could be an offset for that (read on). Here is the latest from the Ethanol Producer’s Newsletter. “The 2009/10 outlook for U.S. feed grains is for slightly lower production, rising use, and tighter ending stocks,” the report said. “Corn production for 2009/10 is projected at 12.1 billion bushels, down 11 million bushels from 2008/09 as lower plantings more than offset higher expected yields. Harvested area is projected at 77.8 million acres based on historical abandonment and derived demand for silage. The yield is projected at 155.4 bushels per acre, 1.5 bushels below the 1990-2008 trend based on the slow pace of planting in the eastern Corn Belt as reported in Crop Progress. The projected yield assumes a mid-May planting progress well below the 10-year average and just below last year’s delayed progress. Corn supplies, projected at 13.7 billion bushels, are down 35 million from 2008/09. Lower 2009/10 beginning stocks reflect this month’s 50-million-bushel increases in both ethanol corn use and exports for 2008/09.” OK now it gets interesting. The 800 pound gorilla which may enter the picture in the Fall, when the first grain crops start coming in, is the “cellulose wild card”. BOO does not fully appreciate the impact that this could have on ethanol supplies. In fact no one really knows if the technology is really ready yet. It's not rocket science, but it is tricky to ferment ag-waste. There is no way of knowing how many of the corn ethanol producers have added cellulose capacity – either quietly on the side, or as an add-on part of the corn fermentation process. Last year, it seemed as if many of them were looking at cellulose favorably - since for one thing, almost every single farmer who sells corn, can essentailly double the tonnage of feedstock which he can supply, by adding the ag-waste and stovers to the grain. There are new ways to use this waste, with different enzymes and yeast, as if it were grain. You do not necessarily need to separate the two processes, since there is plenty of overlap and some synergy. Or alternatively these cellulose sources can spring up in forested areas. There are several dozen stories like this one, to be found on the net: http://www.forbes.com/feeds/ap/2009/07/04/ap6618033.html A few observers see an incredible 20 billion bushel equivalence potentially going to ethanol in the 2009-10 harvest season, IF (big IF) the price remains adequate - yet with no reduction in "food corn" (which was the bad-spin last year - and it got too much criticism started, but things are different in 09). What it all means is that this could be a golden opportunity for DoE and the new administration to jump in with price supports for ethanol soon - to guarantee at least around a $1-1.25 price for ethanol and keep everyone in the green, so to speak. The effect of this would be to drop the price of OPEC oil below $20 barrel, some experts opine ! BTW ethanol is available from Brazil at half that price, so it is not unrealistic, as a fair price for US farmers and ethanol producers. BTW – cellulosic ethanol is *carbon-neutral,* or so the claim - since the cellulose eventually turns into CO2 no matter what. My prediction – around November, oil will fall to near the floor support level of $40 - and by the end of the year could hit $20 barrel if Obama acts decisively to keep ethanol producers profitable, at the expense of the oil lobby (he will not have the courage to do that). The oil PACmen are brimming with Payola buck$ - and they will not sit idly by and let this happen without a tooth-and-nail fight. Will the new admin cave-in to big oil, as has happened for predictably the last century? Probably. However, it is foolish to think $20-40 oil, for a few months this winter and next spring, is a good thing. For the longer term, we are near Hubberts peak, and ethanol is the only thing which has “delayed the inevitable.” We should not let BOO crush ethanol, however, even if we do not like ethanol as the long-term solution. Ethanol does *keep capital at home*, instead of letting it go overseas; and hopefully – valid energy alternatives to any kind of carbon are on the way. We do not need additional downward pressure on the dollar. The new admin can forestall this by propping up ethanol, at the expense of imported oil. Keeping capital at home is worth all of the negatives which anyone can throw at ethanol. The best thing that the administration could do now IMHO - would be to add a large and significant import tax of around $20/barrel on imported oil – to be triggered and phased-in when oil gets down near $40 – and which applies only to OPEC imports only – to keep the effective price near $50 which compares well with what the profitablility comparisons is for ethanol at $1.25. And at the same time, to encourage hydrous ethanol at the pump (i.e. ~75% ethanol, 20% H2O with less than 5% petroleum content - for lubrication) and to encourage the diesel-like engine development, which is best suited to burn hydrous. There are too many comparative advantages of “hydrous” as a fuel to mention again, like much higher Carnot efficiency due to anti-knock qualities … and in short: “cellulosic hydrous” can be a short-term savior of the US economy by propping up the dollar at the best possible time, keeping the dollars at home, enriching the US farmer, and punishing illegal cartels. It gives us that window of opportunity, one or two years, to provide the technical “miracle” breakthrough in alternative energy which is what we really need to maintain the way of life we treasure so much, and which has been threatened by this stupid dependence on foreign oil. Jones - As for the value of expert opinion: "There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer ... ergo- be glad this posting is from no expert <g>
