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Author Topic: Current Ethanol Delivery Issues Back to Topics
brerrabbitTX

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Message Posted: Mar 8, 2014 12:47:06 PM

Ask the average poster on this board and they will say I am anti ethanol because I work in the oil business. Reality is as I have said all along I have no problem with ethanol. If it can pay the entry price and get in the game good for it.

However the one thing I have said over and over again is that before we can move to the level of ethanol consumption that the average poster here would like to see there needs to be a very expensive investment in infrastructure to provide consistant, reliable distribution of the product. Today all across the US the average ethanol content is 10% blends. It is mandated in most areas. Right now due to the weather and limitation of rail and marine transport there is a shortage of ethanol across the country. Not in the midwest where most of the ethanol is made, but on the coasts where the majority of people live there is trouble getting product there. Average rail time is ten days. Right now it is over 21 days. Empty rail cars cannot make it back to the ethanol plants. Ethanol plants are reducing and curtailing production because their tanks are full and they have no where to put anymore.

Current infrastructure cannot move 10% ethanol blends, what happens at 15%, 20% or greater? The system cannot do it today. And before you say it is a conspiracy of big oil I will say part of the issue is that a lot of rail is being taken up by oil coming from the Dakota's but they are paying the increased price for the cars to carry product and increased costs to the railroads. They are not preventing ethanol from using it, there is just not enough for everyone and they are leaving product in tanks as well because they don't have enough rail to move all the oil either.

Debate the benifits of ethanol all you want and the harms of oil all you want. My point all along has been the infrastructure to move higher volumes of ethanol are not there and therefore when doing your price and value comparisons, you are leaving out the investment cost of distribution for ethanol and comparing it to fully loaded gas costs that include distribution and terminaling. To compare apples to apples they both have to be fully costed and ethanol currently is not.
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BAJALRRP
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Message Posted: May 2, 2014 11:11:14 AM

Ethanol is ruining my small engines, and causing food prices to go up.
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PrototypeDevil
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Message Posted: May 2, 2014 10:51:56 AM

k
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Hannie59
All-Star Author Appleton

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Message Posted: Apr 3, 2014 11:54:16 AM

Ethanol dropping like lead baloon. Trains rolling.

And brer, agreed. They push for the e-15, and when stuff like this happens, pushing up the price, they go silent.

Need more PR and truth mongering geared to ffv and e85, and more plant to pump.



[Edited by: Hannie59 at 4/3/2014 11:59:24 AM EST]
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brerrabbitTX
Champion Author Houston

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Message Posted: Apr 2, 2014 9:36:55 AM

Noko,
Yes there are problems getting gas to Florida. There are also issues getting ethanol to Florida. Since the requirement to sell E-10 most refiners have started making what is called sub grade gasoline. Since ethanol raises octane by a little over two points at the 87 level, refiners are making 84.5 octane fuel to blend with the ethanol. However this fuel cannot be legally sold without the ethanol. It is not fit for use and does not meet state and federal regulations as well as manufacturers requirements. So shortage of ethanol means a shortage of motor fuel. Terminals can produce higher octane 87 but it would mean blending 50% 84.5 with 50% premium and the cost would increase significantly. Also since premium only makes up 10% of total gas sales the tamks at the terminals are much smaller and therefore they could not blend nearly enough day to day to meet demand. An indvidual state bucking the ethanol mandate does no good. Since Florida has virtually no refining capacity in the state they are required to get all there gas from out of state. Refineries cannot produce 87 for Florida while producing 84.5 for all their other demand. One state bucking the trend puts themselves on an island.
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brerrabbitTX
Champion Author Houston

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Message Posted: Apr 2, 2014 9:21:15 AM

Hannie,
There is not shortage of oil either. That would mean to the average poster here that there should be plenty of cheap gas available right? Wrong. It is not the oil when it comes to gas or the corn when it comes to ethanol that is in short supply. It is a lack of refineries and pipelines in the case of oil, and the lack of infrastucture in the case of ethanol that makes it in short supply.

I know I keep repeating the same mantra but lets look at an example. A terminal on the Pacific coast has a pipeline that delivers gas and diesel into it in 2006. No ethanol blending, just gas. Bush signs the RFA into law and all of a sudden the terminal has to prepare to blend ethanol into it's gas. So the company that owns the terminal has to go through a process that involves either acquiring additional land to build ethanol storage tanks, or turn a products tank into ethanol storage. Then comes permitting. Regulatory agencies don't like oil or oil products but believe it or not because of the volitile nature of ethanol they like permitting those tanks even less than oil products. Then the terminal has to build the tanks, get the permits, reconfigure the piping at the terminal, build a rail spur and off loading facilities to get ethanol by rail, contract with ethanol producers in the Midwest align rail shipment, buy new blending equipment and new blending software, and adjust and test their additives to make sure it is safe to use with ethanol.

Then at the retail site level prior to the first delivery of ethanol blended fuel the station has to sell down to tank bottoms, have their tanks cleaned, pump out the tanks and then drop the first load of e-10 in. I know personally of terminals that spent up to $20 million on the process. There are thousands of terminals across the country. The cost of all that was born by the oil companies, terminal operators and individual site owners. Any cost recovery was in the form of higher gas prices. But was it really higher gas prices, or just doing what the law said they had to do? Would the costs have been there if the RFA never happened?

So now as ethanol delivey issues are raised again the cost is reflected in gas prices and the sellers of that product are blamed. Ethanol has never had to spend one cent to get their product to market. Since the refiners have to come up with the RIN's credits they were the ones forced to spend the money. They have never had to raise their cost because of they need to recover any costs related to distribution of their product. So how can you say ethanol is cheaper than gas again and again when ethanol does not pay it's fair share of the costs? Are ethanol producers building pipelines, building more rail cars, doing anything to get their product to market? If they are I have not seen it.

Finally since the RFA caps the amount of ethanol that can be used from corn, the reality is why should or would ethanol producers ever pay any of these costs? They won't, they don't have to. The law is written in their favor and they know it. That's why they push so hard for 15% blends, it's easy money with no further capital investments. They just want the terminal operators and oil companies to pay for the expansion of the use of their product and they won't do it on a level playing field. They want to hide behind government requirements and regulations because their is no financial risk for them.
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NokomisFL
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Message Posted: Apr 1, 2014 9:45:10 AM

So I hear that gasoline has jumped in price locally not just because of shipping issues into Tampa Bay, but also because ethanol is now more expensive than gasoline. Since Florida repealed the ethanol mandate and Gov. Scott signed the repeal into law, why are we still using it? Is it contractual? If so, when will these contract run out.

Just asking.
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Hannie59
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Message Posted: Apr 1, 2014 8:04:03 AM

brerrabbitTX, there is no ethanol shortage. In fact they so desperately need the rail car space that they HAD to shut down becaus ethey have nowhere to go with the oversupply of ethanol they have.
Ethanol shortage? There isnt one. They have gazillions of tons of corn waiting to be processed but the storage for the liquid product is low because they couldn't get it shipped.

As I said, ethanol is guilty here, but I say it cautiously. Ethanol is counting their margins and has forgot what they are all about. The cost of ethanol (to produce) is about half of the cbot rate. Disgusting. Why does petroleum get all the supposed rail space and ethanol plants left in the dust? And now there is no back-up on the rails, so we ought to see ethanol come way down in the next 2-3 weeks. If it doesn't I am going to rail on the corn lobby like you have never seen.

[Edited by: Hannie59 at 4/1/2014 8:04:47 AM EST]
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 31, 2014 1:28:18 PM

Just as an aside to all these issues keep in mind it is not ethanol that is getting the black eye in all this. All customers see from the street is that gas stations don't have fuel. The stations without gas are everything from the major oil companies to the independents and the price is higher to discourage demand. The fact that it is a shortage of ethanol causing many of the issues across the nation, not a shortage of gas. There is very little mention in any press that it is an ethanol problem. But the reality is without the ethanol gas cannot be sold because that is the law.
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Hannie59
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Message Posted: Mar 29, 2014 7:30:44 AM

This situation has become complete BS. Ridiculous in fact. And this is very rare, but I do not blame the oil industry for this one. This is a first.

ATTENTION CORN LOBBY: Get your act together NOW! If you fail to be able to supply the market when corn is 4.50 a bushel, cheaper than it has been in ages, then you are as guilty of price gouging as oil has been over the years.

ATTENTION CORN LOBBY: In case you haven't noticed, I have been an ardent supporter of your product. Focus on getting FFV owners (there are millions) interested in the REAL alternative to gasoline, E-85. And get the pricing right. You lose big E-85 users like me, and you're done for.

GET THE FOCUS ON E-85, quit whining about E-15, blend walls, and everything else you are doing to screw up E-85's viability. Gives a crap about E-15! Fix your supply chain issues. You better get on this quick!



[Edited by: Hannie59 at 3/29/2014 7:37:37 AM EST]
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brerrabbitTX
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Message Posted: Mar 27, 2014 11:36:32 AM

Another issue to consider is this. Pressure would be taken off the railroads if the oil now being moved by rail were moved via pipelines. However several of those pipelines have been block by various groups and individuals. People like President Obama who is against the pipelines. This bodes well for Warren Buffet whose fund owns a large share of BNSF which transports the oil. BNSF CEO said in an interview last week that oil currently only takes uo 4% of the railroads capacity and it is not the issue. WHAT? Then why can't they move ethanol?

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Hannie59
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Message Posted: Mar 27, 2014 9:47:52 AM

The latest:
"Analysts say the inability to move ethanol out of Chicago to other parts of the country, particularly east, has caused producers to lower production and reduce supplies to the point that April prices rose Monday on the Chicago Board of Trade to just more than $3.00 per gallon, a price higher than that for gasoline futures and a level not seen since July 2011.
Harsh winter conditions have slowed trains down and resulted in fewer rail cars per train. That, combined with more rail cars being turned over for hauling a surging amount of crude oil, has left railroads with insufficient capacity to haul ethanol, wheat and other products.
Analysts say ethanol plants that usually see trains return within a matter of weeks now have to wait months. The BNSF Railroad said earlier this month that it was experiencing delays of at least 15 days.
Still, industry officials say the return of warmer weather is expected to improve rail shipping conditions within the next several weeks and that ethanol production will return to levels necessary to ensure adequate supplies."

Nobody into ethanol wants to see EXPENSIVE ethanol. This situation must be fixed.

[Edited by: Hannie59 at 3/27/2014 9:51:21 AM EST]
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 26, 2014 11:03:13 AM

Personally I would never argue damage, because I don't believe it, never have. I will say oil has fought but many of their arguements made while not always sound usually come back to the economics whether they say it or not. Not allowing independents to carry e-85? They have no control over independents so they can not stop them. If you are referring to a Conoco station independently owned that was forced by contract to sell premium instead of high ethanol blends then yes, the oil company did that. But the operator of that station signed a contract with Conoco that said he would carry premium and Conoco paid him upfront money to do so. That was a contract violation plain and simple. Call it what you will but the operator violated the contract that had economic consiquinces. You get money up front that is worked off over the life of the contract and then violate it then you owe some one money. That is what happened there plain and simple. No plot just contract law.
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Hannie59
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Message Posted: Mar 26, 2014 10:35:57 AM

OK, well brerrabbitTX I simply cannot disagree on many of your points regarding this...especially the bottom line of costs. I question that oil has not tried to discourage any competition, however. History shows that they have fought dirty against alternatives. Look at how they strong arm independent stations into NOT selling E-85.... But thanks for not going down the "damage" road.

Could we be at the point where ethanol has to step up? I'd say yes.

So what will happen? I hope we will see both sides of this issue decide to compete on the costs and merits of the product, more flex fuel vehicles, and ethanol create its market share based on facts, and their ability to produce a product that genetates better costs per mile than gasoline.

Are you up to it, corn lobby?

[Edited by: Hannie59 at 3/26/2014 10:44:18 AM EST]
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 26, 2014 10:17:35 AM

"I have agreed with you that ethanol has to be responsible for making the logistics work. They have been quite successful where ethanol works geographically."

Well yes and no. Ethanol has not made logistics "work". Why should they? The Federal Mandate puts refiners and oil companies on the hook for using 10% ethanol blends. No where in the law does it require ethanol producers to do anything. Ethanol makers, make ethanol. Getting it to the terminals stretched across the country is the responsibility of the companies that have to have 10% ethanol in their product to legally sell it. These are the companies that pay for the transportation to their facilities, these are the people that were forced to spend capital to build ethanol tanks and blending systems at their terminals, these are the people that had to build rail spurs into terminals to facilitate ethanol. Ethanol has done nothing to "make logistics work". They make ethanol and that is all they do. But when ethanol does not penetrate a market as well as people think it should oil companies are blamed. Oil companies, terminaling companies, tankage services and others have all spent millions bordering on billions of dollars to "make ethanol work" because the law of the land says they have to.

Why does the RFA push for small incremental gains like 10 to 15% blends instead of big e-85 pushes? Because at a 5% incremental increase they can again by way of legislation force others to pay the cost of the logistics. A wholesale push to E-85 would expose the nature of the beast and the true costs involved. It is more benificial for the RFA to win the small incremental battles because that way they continue to avoid the true costs. Additionally they ask for increases in the percentage through the EPA because again they have a mandate by law that forces others to pay what should be their costs.

As I have said from day one, this is not about how good or bad ethanol is as a fuel. And I have said more than once I have nothing against ethanol, which I don't. What I have said from day one is it needs to be fully costed and then it needs to be able to compete on is own merits and costs and then let the consummer make his choice. Cost rules the day with the vast majority of US Fuel buyers.
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Hannie59
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Message Posted: Mar 26, 2014 9:13:52 AM

"Don't paint me with you oil companies lie brush stroke."

I wasn't. This is just an overtone that I have trouble ignoring and will continue to until it stops. But it is off topic so sorry ... Wasn't questioning your data either just wanted to understand the issue fully.

"No temporary waivers granted for supply issues. If you cannot get ethanol you cannot sell gas."

Well, then we agree, as I stated. They need to issue a waiver on ethanol. Even permanently if needed.
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 26, 2014 8:57:58 AM

"IF" my description is accurate?Don't paint me with you oil companies lie brush stroke. The information is available, OPIS publishes the numbers every day.

Spot Close 3/25/2014
LA Price Change P Spread
LA-CARBOB 2.9055 -0.0015 0.11
ETH 4.035 -0.005 -
SF Price Change P Spread
SF-CARBOB 2.9005 -0.0015 0.065
ETH 4.035 -0.005 -
© Oil Price Information Service

No temporary waivers granted for supply issues. If you cannot get ethanol you cannot sell gas.
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Hannie59
All-Star Author Appleton

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Message Posted: Mar 26, 2014 8:21:21 AM

OK brerrabbit TX, this one is unusual. IF your description is accurate, then something is wrong.

Ethanol is being unusually silent at this time...

If I assume you are correct and if ethanol is artificially inflated, it can't last long. And, if you are right about this, then it's time to end the RFS. But the air quality standards that require 10% ethanol in regular unleaded are different than the RFS.

I have agreed with you that ethanol has to be responsible for making the logistics work. They have been quite successful where ethanol works geographically. THAT is what they need to build upon. The ethanol industry is now a few dacades old. Get out there and make it happen ethanol. Forget pushing to E-15 and promote E-85. You should have done this a long time ago.

Working smarter is what is needed here. It makes no sense to legislate black and white with no exceptions. If ethaonl is higher than rbob in California, they need to stop requiring the ethanol component immediately. Suspend it temporarily or permanently... doesn't matter to me. It's time to let this debate go full circle. Require FFVs to give everyone a choice, hold the petroleum industry to truth in advertising standards, and dump the RFS. Most people calling only for the last requirement I mentioned don't get it.


[Edited by: Hannie59 at 3/26/2014 8:29:45 AM EST]
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 25, 2014 2:10:14 PM

I have tried since I started posting on all the boards here to explain a lot of why things work the way they do in the fueling industry and in the energy business from the perspective of someone who is in his 33rd year in the business.

According to most posters here I am always wrong or a shill for the oil industry. Well anyone who believes that is wrong. People have a limited understanding of the entire network and when they are unsure about some piece of it they make up something that makes their story gel calls the oil companies names and everyone chimes in.

From the start of this thread all I have said was there is a problem distributing ethanol that will continue and get worse over time as higher ethanol blends are mandated or used. Posters on this board say it's an oil company conspiracy. Well may it is maybe it is not.

BUT; one thing holds true right now, there does not exsist a reliable system of delivering ethanol where it needs to be to even meet the 10% blending requirements. Now if the mandate goes to 15% what do you think happens?

Blend wall, according to the ethanol bunch, it's a myth. Well the prices being paid in California today are not a myth, they are what is being paid. Understand that yes people are getting ethanol cheaper in California today than $4, but all that ethanol under contract bases it's price on the daily spot price or a percentage of it and today with spot at $4.04 those prices are going way up as well. And all those contracts are signed with the big ethanol plants in the midwest. It goes back to my original premise that you cannot take victory laps for how cheap ethanol is if you your only looking next door to where the ethanol is made. What is the cost where 85% of the US lives and works and need ethanol. Today in California it's 4.04 in New York Harbor spot price is 3.94, on the Gulf Coast it is 3.64, in Chicago it is 3.3875.

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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 25, 2014 1:56:08 PM

"But CBOT ethanol @ $2.49 for june, where do you get $4.04 brerrabbit TX?"

Is it June? CBOT gets you a piece of paper that says come June you will get a gallon of ethanol deliverd somewhere in the Midwest for $2.49.

Now live in the moment and go check daily spot prices for ethanol available in Los Angels or San Fransico on a service like OPIS or Platts and you will find that a "real" physical gallon of ethanol on the wholesale level costs over $4 because there is virtually none available and without it there is no way to sell motor fuel in the state.

Oh and who are the sellers of that $4 ethanol? Well some brokers, a couple of oil traders, and Archer Daniels Midland and other ethanol producers. While you think the cause of ethanol is so noble they see it the same way they see everything else and the same way the oil companies and every other business in the US sees it, a way to make money. I promise you regardless of the product in the end it is not about good or bad, or cleaner or dirtier, it is about two things, availability and reliability, and price. Any alternate fuel has to be able to surpass current fuels in those areas or they will never gain widespread acceptance.



[Edited by: brerrabbitTX at 3/25/2014 1:56:44 PM EST]
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Hannie59
All-Star Author Appleton

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Message Posted: Mar 25, 2014 1:20:24 PM


But CBOT ethanol @ $2.49 for june, where do you get $4.04 brerrabbit TX?

[Edited by: Hannie59 at 3/25/2014 1:22:27 PM EST]
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Hannie59
All-Star Author Appleton

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Message Posted: Mar 25, 2014 12:57:19 PM

But beware, something about this is BS. Market manipulation from big oil to drive up the price of E-85 that's what this is. The conspiracy will stop at nothing. Valero bought a bunch of ethanol plants again. AGAIN! Crooked! Nothing good can come from Valero.

[Edited by: Hannie59 at 3/25/2014 1:01:11 PM EST]
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borsht
Champion Author Oakland

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Message Posted: Mar 25, 2014 12:51:30 PM

Isn't it obvious that This is what happens when government dictates ridiculous impossible to fulfill mandates.
Ethanol doesn't work for California.

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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 25, 2014 12:06:47 PM

As of mid day today the wholesale price of a gallon of gas in California is about $2.91 a gallon, while the price of a gallon of ethanol in California is $4.04. The troubles continue.
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AFOS
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Message Posted: Mar 23, 2014 9:41:51 AM

That is...spot prices in Chicago trading.
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AFOS
Champion Author Chicago

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Message Posted: Mar 22, 2014 3:39:11 PM

Spot prices for ethanol closed the week up 72¢ at an all time record of $3.30/gallon. At that price it raises, not lowers the price of the gasoline it is blended into. E-85 prices could end up higher than E-10 prices if this persists.

The reason cited is lack of rail cars for transport.
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thebrohta167
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Message Posted: Mar 22, 2014 2:09:27 PM

ok
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mfeldstein
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Message Posted: Mar 18, 2014 1:56:44 AM

Ban ethanol.
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 17, 2014 5:40:07 PM

California is not unique really. They are huge farmers no doubt but similar limiting capabilities and choices are applicable across the country. Our farmlands don't always match up nicely with where the majority of the demand is and certain areas cannot afford to dedicate resources to ethanol production.

From the start what I have said is you cannot compare ethanol pricing and logistics in Iowa to those of say California. Until ethanol is fully costed the cost comparisons are not relivant. And that even means if it can be locally produced, what are they making it out of. Cellulosic ethanol is certainly a possibility but the cost and availability of it still makes it not a real solution. Build the plants, the pipelines, the rails, the terminals, and the infastructure and reflect those costs in the price of ethanol and then let the market decide. We are not there today and quite frankly given the amount of market share claimed by ethanol without those expenses to date and I quite frankly believe that we will never get to that point because no one (ethanol) will spend the money to get there.
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borsht
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Message Posted: Mar 15, 2014 6:25:53 PM

It's been suggested that ethanol should be produced locally, because of the transportation problems. I agree. However, California has a unique problem, and decisions will have to me made as to what constitutes the best use of our water resources.

http://www.beachcalifornia.com/california-food-facts.html

Though tourists hardly consider the agricultural significance of California as a food growing region, the temperate year-round climate and expanses of land provide foods the nation and world have grown to enjoy and count on. Below are some of the top crops and percentage of the nation's supply produced in California.
Food Facts
California has been the number one food and agricultural producer in the United States for more than 50 consecutive years.

More than half the nation's fruit, nuts, and vegetables come from here.
California is the nation's number one dairy state.
California's leading commodity is milk and cream. Grapes are second.
California's leading export crop is almonds.
Nationally, products exclusively grown (99% or more) in California include almonds, artichokes, dates, figs, kiwifruit, olives, persimmons, pistachios, prunes, raisins, clovers, and walnuts.
From 70 to 80% of all ripe olives are grown in California.
California is the nation's leading producer of strawberries, averaging 1.4 billion pounds of strawberries or 83% of the country's total fresh and frozen strawberry production. Approximately 12% of the crop is exported to Canada, Mexico, United Kingdom, Hong Kong and Japan primarily. The value of the California strawberry crop is approximately $700 million with related employment of more than 48,000 people.
California produces 25% of the nation's onions and 43% of the nation's green onions.
Gilroy, California, "Garlic Capitol of the World," has hosted 2 million at the annual Gilroy Garlic Festival.

Fruit and nut trees have been left to die because the water resources wasn't available in the central valley.

The courts have choked the water supply because of delta smelt.
A significant problem exists with the reduced water run off, if water isn't allowed to flow to sea, there will be severe salt water intrusion.

So corn, and wheat are basically low on the totem pole for justified water use.
If the alfalfa is hit, the dairy industry will be hit hard.

It seems apparent that California can't afford in all sanity to continue with its ethanol mandate. The only recourse is to run it in by trains.
The entire rail system is being slowed down because of all the oil traffic.

The country may soon discover that ethanol doesn't make good sense in California.
and probably the entire country.

When will it occur to peoples thinking that nuclear energy and coal aren't as bad as the tree huggers make them out to be.

When will it occur to us that we need a diversity of energy sources?

And ethanol needs to be bumped down on the priority list. specially California.
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Hannie59
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Message Posted: Mar 11, 2014 7:57:56 AM

Yeah, transportation is a big part of the cost of everything.

Despite my appearance as an ethanol zealot, I think it almost has to be more of a local product. I have never claimed corn ethanol is a national product per se. I believe ethanol from plant material, whatever form that may be, should be mostly locally produced. I don't think it can or should replace petroleum. I believe wide availability and usage of a clean alternative to it is a good thing though. If you can't grow corn in California, Pacific Ethanol produces large quantities using sugar beets (not even the kind that people eat). If you can't grow it in Florida, well they'll just have to wait for hemp or switch grass cellulosic.

My objections are strictly regarding the misinformation as to the true nature of alcohol as a fuel. It is not something that ruins engines. In fact, is better to run in engines that petroleum. But some in your industry (not you) continue to flood the channels with the same old BS about ethanol. With the intention to "scare" people about the only even remotely viable alternative to oil at this point.

This forum by nature divides this issue into two sides clearly. I feel that is because of misinformation that so many believe. I think you may be the only contributor to this debate from "your side" that is, that uses some factual information and logic and brings a good perspective to the table.



[Edited by: Hannie59 at 3/11/2014 8:04:34 AM EST]
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brerrabbitTX
Champion Author Houston

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Message Posted: Mar 10, 2014 10:43:45 PM

"If you ask me, ethanol needs to find a way to get their product to consumer by blending their own E-85 at their own facilities. And have access to the purchase the gasoline component for making the e-85 at the terminals w/o discrimination. Make their own E-85, get it to pump on their own. That seems ideal to me, and in some places, it is happening. "

I went back and read this and all of a sudden I relized that you do understand the issue. Ethanol needs to find a way to get their product out to distribution. You are saying exactly what I have said all along. Where we differ is I say if ethanol wants to be fully competitive and fully comparable then they need to pay the entry price in the form of build the distribution network, where you say that they should be able to just use what is there. Gas is not an issue, anyone will sell gas at market prices to any ethanol maker who wants to blend it to e-85. Heck my company will sell it to them at market prices, no problem. That's not the issue, the issue is ethanol does not have any terminals and does not want to pay for any terminals because it would raise the cost of their product, they want to use oils infrastructure which has been paid for over eighty years. Ethanol also does not want to pay for more railcars, track, engines, pipelines, or storage tanks all across the country because that makes their product less competitive as well. Try as you might you cannot use ethanol economics in the Mid West and think they hold true for the entire country because they don't. The Mid West can truck ethanol to terminals while the coasts where 85% of the population lives and uses fuel need to have the ethanol transported to them by means other than trucks.
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brerrabbitTX
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Message Posted: Mar 10, 2014 5:26:18 PM

One last thing about pricing. We, as in my company sells e-85 to retailers to sell at their stations. We price it very reasonably at the wholesale level. The retailers then price it on the street. We (the oil companies) cannot by law and severe penalty tell the retailer what to price at. That is wholly their decision. Many retailers mark it up as much as 70 cents.

So as you say that the oil companies "jack it up" keep in mind the guy selling it out on the street is not the oil company. So unless you know how the pricing works watch who you blame for the pries.
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brerrabbitTX
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Message Posted: Mar 10, 2014 5:19:52 PM

Hannie,
This is where you and I disagree and you as well as other ethanol supporters can't quite get your arms around it. To get to the next phase of ethanol fuels (that being higher than e-10, from e-15 to e-85) it has to be plentiful and reliable. Right now it is not. In the Mid Continent area where it is produced it is easy to move around and there seems to be no issues. The problem is the last time I heard the number something like 85% of the population of the US live within 100 miles of a gulf or an ocean. That means the vast majority of the fuel used in American happens in those areas. There is little if any ethanol production in those areas. So therein lies the rub. To get ethanol use at higher levels across the entire US as you would like to see it then money has to be spent on a reliable distribution system to get it there. Gasoline has been building, developing, and improving their system for over 80 years.

Ethanol shows up and all of a sudden ethanol backers think it should be able to magically get everywhere it needs to go without any additional cost. What I have said and will say again is that gasoline and diesel in this country is fully costed accounting for distribution and transportation costs delivered to the retail site level. Ethanol because in most places it is only 10% of the blend is not costed properly. To move to a fully integrated E-85 market place would mean spending money on that distribution system. Or forcing the oil industry to give over the pipelines they have spent over 80 years and billions of dollars on.

Not realistic.

This is not a slam on ethanol this is simply a cost to enter the marketplace that any new entry into the market place must consider.
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Hannie59
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Message Posted: Mar 10, 2014 9:07:57 AM

brerrabbitTX, I understand that thanks for the clarification. Understand that to me it looks like another reason by oil companies to jack it up, and again blame something else.

You know brer, if all this blaming of ethanol for this and that were true, you'd think the oil industry would welcome the fact that E-85 is really taking off in the Midwest. Seems that would free up some additional product for those areas that ethanol distribution is lower.

If you ask me, ethanol needs to find a way to get their product to consumer by blending their own E-85 at their own facilities. And have access to the purchase the gasoline component for making the e-85 at the terminals w/o discrimination. Make their own E-85, get it to pump on their own. That seems ideal to me, and in some places, it is happening.
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Hannie59
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Message Posted: Mar 10, 2014 8:25:44 AM

Shockjock, there are no restrictions on posting there. No reward points either like this site. By all means feel free to contribute, you will see that your prices post like everyone else's.

As an E-85 enthusiast, I can tell you that like everyone else in this country, we are also very mindful of the price of our fuel. Therefore, most posters probably naturally frequent the stations that price it properly. Furthermore, if a station chooses to gouge E-85, they won't sell much. The ones that do mark it up properly, well, they do quite well with E-85.

[Edited by: Hannie59 at 3/10/2014 8:27:49 AM EST]
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Shockjock1961
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Message Posted: Mar 9, 2014 5:11:57 PM

Hannie, what I find amusing about your map is that 85% of the identified places where you can obtain E-85 do not have prices associated with them, and yet they list an "average" for a state by the very few prices that have been reported. Is it a coincidence that the e-85 outlets where the prices are near or equal to the e-10 prices in the area are not added, and only the ones with a larger spread are?
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Hannie59
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Message Posted: Mar 9, 2014 1:47:32 PM

Shockjock1961, if you can state one station that doesn't properly price E-85, so I can I. But I can also tell you that the spread in most of the Midwest is close to 20% and more between E-85 and E-10. And the mileage loss in some FFVs is 20% at most but averages around 15% in some FFVs. Also 20% would be stop start city only movement. All FFVs get 15% or less only on the highway.

E-85 prices

[Edited by: Hannie59 at 3/9/2014 1:49:25 PM EST]
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Shockjock1961
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Message Posted: Mar 9, 2014 1:42:02 PM

"Also, ethanol is "costed", and where they can make E-85 available, they are doing so, and at very attractive pricing also"

Not always true. For instance, E-10 is priced around $3.69/gallon, and E-85 is priced around $3.47/gallon (that despite there being an ethanol distillery not more then 15 miles away). Since E-85 provides about a 20% reduction in mileage, $3.47/gallon is not a very attractive price...
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Banjoe
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Message Posted: Mar 9, 2014 8:29:23 AM

Thanks for the excellent information, fellows. These inside-industry views help us understand the challenges that really go on behind the scenes in the effort to deliver fuel for our easy consumption.

Much appreciated.
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brerrabbitTX
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Message Posted: Mar 8, 2014 5:27:49 PM

Hannie,
I work in the industry and the current situation is not a conspiracy. Many don't realize that whether it is e-10 or e-85 the gas and ethanol are not blended together until right before it is put on the truck to be delivered to a station at the local terminal. So there are tanks full of ethanol, tanks with gas, and tanks with additive. The three are inline blended out of the tanks in the pipe on the way to the truck. Refiners do not blend the ethanol at the refinery because that mix cannot be transported in the pipe.

Gas gets to terminals in pipelines, ethanol gets to terminals via rail cars, trucks and barge, but the most by far is delivered by rail.

The point I have always made is ethanol getting to where it needs to get does so by rail and to fully cost ethanol where ethanol needs to be is for a seperate pipeline system to be created for it or a huge investment in the rail system needs to be made. Yes production costs of ethanol are cheaper than gas, no doubt, but oil is already fully costed for drilling and production, delivery, refining, and ultimate delivery to the consummer. While ethanol gets to terminals today, it only represents 10% of the total fuel demand. To become a larger percentage capital investments need to be made to increase that capacity.
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Hannie59
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Message Posted: Mar 8, 2014 1:32:23 PM

Tom, in alot of areas it is widely available and 70-90 cents cheaper. I am fortunate that I have the option. But right now geography is the reason for some of this type of improper pricing on E-85, but not all. If retailers sold it at the same margin as gasoline, it would be. But many retailers are bullied into pricing it inappropriately due to contracts with terminals and such. Ethanol could make their own E-85 and distribute it. Which is how in some places, it's 90 cents cheaper :)

[Edited by: Hannie59 at 3/8/2014 1:32:41 PM EST]
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TomB2
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Message Posted: Mar 8, 2014 1:15:17 PM

There are few E-85 outlets left here in my area probably because the cost at the pump is so close to that of E-10 and just not worth it; people here are rejecting it. The last time I saw E-85 for sale, it was only about 10 cents per gallon cheaper than E-10.
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Hannie59
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Message Posted: Mar 8, 2014 12:59:17 PM

Hi brerrabbitTX.

Permit me to clarify what you are saying here. Your claim is that some refiners, in some parts of the country, cannot get enough ethanol to blend to E-10 to satisfy demand in some areas? Is this your claim?

Also you are claiming that shortages exist because of lack of rail capacity?

Because I read that too. I question it. Also, ethanol is "costed", and where they can make E-85 available, they are doing so, and at very attractive pricing also.

Thanks.



[Edited by: Hannie59 at 3/8/2014 1:08:44 PM EST]
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