Where the next Crash will come..............

[justin]

I have heard ideas like "$25 or $35 of the current price is speculation by hedge funds". My question is how? They can buy all the futures they want, when the contract settles, the physical market has to clear.

My Mega I-bank investment house wife who works on the back end of the derivatives trades (including oil futures) says almost all the contracts are cash settlement. Very few take physical delivery. My guess is most of the options/futures contracts are used by speculators or industry to make money or hedge risk, respectively.

 

[Martha]

I'm happy that less of my money is going overseas...and more is going to help the farming community - its not just ADM & Cargill profiting - farmers, co-ops and the rural community that depends on them for their living...I would prefer they hurry up and use other bio-mass than corn for the ethanol - but it's what we have right now....

I heard a program on NPR in the last couple of days about converting corn to ethanol. Most corn producing land in the US is already in production. The old set aside programs for land have been gone for quite a while. Farmers are no longer paid to hold lands out of production. I think I posted once not long ago about how Iowa is the most developed state in the US, developed into productive farm land. The US is at about the maximum in corn production. So, if we use more corn for ethanol, that means less corn for food.

A price will be paid one way or another.

 

[HFWR]

Article in recent Discover mag discusses advances in conversion to ethanol, including converting the stalks, etc. and other cellulose-rich products...

It's online at http://www.discover.com/issues/aug-06/features/afteroil/, but requires registering...

 

[Martha]

Apparently willow and saw grass are fairly efficiently converted into ethanol, but requires different processing than the current ethanol facilities.

Sugar cane works great. Brazil has converted much of its sugar cane crop to ethanol production. Drove up the price of sugar. Again, food versus fuel.

Part of my job has been in buying and selling ethanol plants, financing them and foreclosing on them. 

 

[haha]

Part of my job has been in buying and selling ethanol plants, financing them and foreclosing on them. 

I guess it aint all peaches and cream then?

Ha

 

[maddythebeagle]

Article in recent Discover mag discusses advances in conversion to ethanol, including converting the stalks, etc. and other cellulose-rich products...

bring on the hemp

 

[Ed_The_Gypsy]

Ed, you think biodiesel is not currently economically feasible? What kind of diesel price do you think would make it work?

Brewer,

I don't know. But when the deal makers underestimate the cost of building a plant by a factor of 2 or 3, that tells me something about what they think the capital charges will have to be to make it fly. Subsidies and tax credits will make this wheel go around.

Martha said

Part of my job has been in buying and selling ethanol plants, financing them and foreclosing on them.

I think this tells something about how shakey the ethanol business is.
I believe that biodiesel is a similar animal.

 

[Marshac]

Martha said
I think this tells something about how shakey the ethanol business is.
  I believe that biodiesel is a similar animal.

I can make you biodiesel using waste oil for under $1/gallon using recycled (free) oil. There have been some recent advances which should push the costs down even farther(new catalysts for the transesterification process, etc) by eliminating the really expensive/hazardous ingredients like methanol.

How well does everything scale up? Beats me. We use 55 gallon HDPE drums (which used to hold udder wash) that we got for free.... in fact, most of our junk was free. I think I paid $30 for a triple beam balance off ebay, but that was about it... if you're used to a "cheap" plant, designing a new plant using large vats and holding tanks that were NOT free, I can easily see how some naieve hippy could underestimate the costs of a real plant.

So why is the finished product on par with regular diesel in terms of cost?

1. Why should it cost less? People are willing to pay $3 for dino, why not $3 for veggie?
2. The taxman favors using fresh virgin oil, not used (free, or low cost) waste oil
3. There are crops that can deliver more oil/acre than corn or canola, but they just aren't grown. The tax code favors certain crops over others.

There are probably other reasons as well, but there ya go. A coworker and I had a whole biz plan worked up for the biodiesel biz, but once we started seeing what some waste oil looked/smelled like........ugh......sick....... it's like dog vomit......so when you can spend you weekend turning dog vomit into diesel AND trying to figure out how fuel taxes work, or playing video games instead.... guess which one wins.

Maybe someday.... someone recently asked us to make some for them.... even offered to pay for all our equipment. Nifty. Too bad it was all free

 

[sgeeeee]

I can make you biodiesel using waste oil for under $1/gallon using recycled (free) oil. There have been some recent advances which should push the costs down even farther(new catalysts for the transesterification process, etc) by eliminating the really expensive/hazardous ingredients like methanol.

How well does everything scale up? Beats me. We use 55 gallon HDPE drums (which used to hold udder wash) that we got for free.... in fact, most of our junk was free. I think I paid $30 for a triple beam balance off ebay, but that was about it... if you're used to a "cheap" plant, designing a new plant using large vats and holding tanks that were NOT free, I can easily see how some naieve hippy could underestimate the costs of a real plant.

So why is the finished product on par with regular diesel in terms of cost?

1. Why should it cost less? People are willing to pay $3 for dino, why not $3 for veggie?
2. The taxman favors using fresh virgin oil, not used (free, or low cost) waste oil
3. There are crops that can deliver more oil/acre than corn or canola, but they just aren't grown. The tax code favors certain crops over others.

There are probably other reasons as well, but there ya go. A coworker and I had a whole biz plan worked up for the biodiesel biz, but once we started seeing what some waste oil looked/smelled like........ugh......sick....... it's like dog vomit......so when you can spend you weekend turning dog vomit into diesel AND trying to figure out how fuel taxes work, or playing video games instead.... guess which one wins. 

Maybe someday.... someone recently asked us to make some for them.... even offered to pay for all our equipment. Nifty. Too bad it was all free

Do you think we will see McDonalds or Burger King get into this business some day? It just seems like they could use their waste oil, process it into fuel and distribute it fairly efficiently if they wanted to.

 

[astromeria]

Cool! You pick up your burger at the drive-up window and fill 'er up at the same time. Ya want fries with that?

 

[wabmester]

Cool! You pick up your burger at the drive-up window and fill 'er up at the same time. Ya want fries with that? 

EAT HERE AND GET GAS!

 

[sgeeeee]

Cool! You pick up your burger at the drive-up window and fill 'er up at the same time. Ya want fries with that? 

I wonder if the product coming from the pump would taste any better than the product in the bag?

 

[Ed_The_Gypsy]

once we started seeing what some waste oil looked/smelled like........ugh

Marshac, I did mention that industrial plants have to control their odors. Did you know that bakeries have to control their odors? That wonderful smell of fresh bread contains ethanol it seems, and someone doesn't like it to get out into the street. Go figure.

Once upon a time, we could just start cooking something in the back yard and sell it, but that was many years and many regulations ago.

It seems to me that there are fewer chemicals being made today than in the past. Safer substitutes for toxic or otherwise dangerous materials are all the rage. That's just fine with me. I make my living in the industrial world, but I am a treehugger.

 

[markplus4]

IMHO, the next big energy solution which will be embraced by the greens and the conservatives is nuclear power. It's clean and very cost efficient. How to make money on it is dicey since the lead times are VERY long.

 

[Nords]

It's clean and very cost efficient.

Speaking as a nuclear engineer-- if nuclear power is so clean & cost-efficient then why, after five decades of the technology, does it still provide only a minority of the U.S.'s energy consumption?

 

[Mwsinron]

Speaking as a nuclear engineer-- if nuclear power is so clean & cost-efficient then why, after five decades of the technology, does it still provide only a minority of the U.S.'s energy consumption?

Well with you being a nuclear engineer you tell us !

 

[Nords]

Well with you being a nuclear engineer you tell us ! 

If that's your response to a rhetorical question, you have a lot of potential to be a nuclear engineer too!

 

[Cut-Throat]

Speaking as a nuclear engineer-- if nuclear power is so clean & cost-efficient then why, after five decades of the technology, does it still provide only a minority of the U.S.'s energy consumption?

Why does it provide 50% of France's energy?

 

[sgeeeee]

Why does it provide 50% of France's energy?

Because France made an unwise bet on the technology.

When you add up all the costs of nuclear engergy -- including the cost of protecting the public from the waste for the next brazillion years -- it is not cost effective. So it's dirty; it's potentially dangerous; and it is expensive. That's a tough sell.

 

[HFWR]

As opposed to coal and petroleum...

 

[maddythebeagle]

Marshac, I did mention that industrial plants have to control their odors. Did you know that bakeries have to control their odors? That wonderful smell of fresh bread contains ethanol it seems, and someone doesn't like it to get out into the street. Go figure.

I am positive that Marchac's dog vomit processing is exempt from both federal and state air pollution regs.....the potential costs of folks thinking he is running a meth lab.....well....

 

[wabmester]

When you add up all the costs of nuclear engergy -- including the cost of protecting the public from the waste for the next brazillion years -- it is not cost effective.  So it's dirty;  it's potentially dangerous;  and it is expensive.  That's a tough sell.   

Not to mention the fact that the transportation sector is responsible for > 50% of oil consumption. Still waiting for nuclear powered cars.

 

[haha]

Not to mention the fact that the transportation sector is responsible for > 50% of oil consumption.   Still waiting for nuclear powered cars.

If some natural gas could be diverted from space heating and electrical generation, a high quality very clean diesel can easily be made from NG.

Ha

 

[Marshac]

Not to mention the fact that the transportation sector is responsible for > 50% of oil consumption.   Still waiting for nuclear powered cars.

Back in 7th grade art class I was cutting up some national geographic mags from the 1950s for a collage, and I do remember seeing a photo of a nuclear powered car. I loved the photo captions- 'happily glowing flasks' and such... awesome. Only in the 1950s can radioactive flasks be gay.

Oh baby, the Ford Nucleon.

 

[sgeeeee]

As opposed to coal and petroleum...

Relative to nuclear? Yes.