Oil and natural gas prices decline, even in the face of continued Gulf of Mexico production interruptions.

http://www.bloomberg.com/apps/news?pid=20602099&sid=a35w1dMta.r8&refer=energy

Eric’s Website

Iran, according to the EIA, is now a net importer of oil despite the fact that it is the World’s number four producer of crude oil.

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

Eric’s Website

Is the production of ethanol part of the answer to weaning the U.S. of its growing dependence on foreign oil? Apparently Congress thinks so because it’s newly revamped energy bill calls for the U.S. to nearly double its usage of ethanol to 7.5 billion gallons by 2012, and provides tax incentives for the creation of ethanol plants.

Will the extra 7.5 billion gallons of ethanol produced in 2012 reduce our dependence on foreign oil by 7.5 billion gallons? The answer is a resounding no.

Ethanol is a product produced from corn. To grow corn, or any other crop, energy must be consumed. Tractors and farm equipment used to till the fields run on gasoline or diesel. The machines used to harvest the crops run on gasoline or diesel. During the growing period, crops must be fertilized. Fertilizer created from natural gas and other hydrocarbon products are most often used. After the corn is harvested, it takes energy, usually supplied by natural gas or coal, to distill the corn into ethanol.

In 2001, David Pimentel, a professor at Cornell University, wrote in the Encyclopedia of Physical Sciences and Technology that when you add up all the energy costs, making a gallon of ethanol takes 70 percent more energy than the finished product contains. His conclusion is that the production of gasohol is actually hastening the depletion of nonrenewable resources.

Pimentel’s conclusion is hotly debated. In a recent USDA report, researchers estimate the production of ethanol results in a 34% net gain above the amount of fossil fuel required to produce it. What does this really mean?

If we use the most optimistic report generated by the Department of Agriculture, the 7.5 billion gallons of ethanol produced in 2012 will only decrease our need for foreign oil by 2.55 billion gallons of gasoline. A refined barrel of oil produces 0.52 barrels of gasoline, or about 22 gallons.

Using the best case scenario, ethanol will only reduce our dependence on foreign oil in 2012 by about 116 million barrels of oil. Even at today’s daily rate of consumption of around 25 million barrels of oil per day, a figure almost certain to increase, ethanol would only substitute for five days of imported oil.

The second argument for the use of ethanol is that it burns cleaner than gasoline and will result in less greenhouse gases. Ethanol does raise the octane of gasoline and does result in a cleaner burning mixture. When you factor in the fact that fossil fuels must be employed to create ethanol, however, the resulting gain is negligible and this argument is largely moot.

Lastly, the use of a food staple to create ethanol has resulted in higher food prices around the world.  This unexpected result has caused even greater havoc in third world countries where it has greatly affected the very poor.

What is the conclusion and what do all these facts mean? Unfortunately, the outlook for the increasing use of ethanol is not positive. Even employing the report of a source highly biased toward using ethanol, the corn-generated fuel will never even make a dent in our dependence on foreign oil, and its resultant use in diminishing greenhouse gases is all but negligible, and the result to our food supply harmful for the world.

ERIC’S WEBSITE