The other day I was looking for a telephone
number from my days as a Director for the Minnesota Corn Growers and I came
across a report I wrote about energy from a workshop I attended fifteen years
ago. Lifted from the report: “People attending the four day workshop were from
US Department of Energy, US Department of Agriculture, researchers from
Industry, university researchers, commodity staff personal (Corn and Soybean),
Washington lobbyist and a lone farmer”. Me!
The purpose of this workshop was about the
dwindling supply of liquid fossil fuel and what role agriculture would play in
the energy economy. I will discuss two conclusions that were made: 1) Corn at
$1.51 is not sustainable and 2) Fossil fuel would be price regulated by 2010.
So how does these future conjectures look
fifteen years later?
Looking at the price of corn, the May 2012
future price is $6.55, and farmers are buying green paint by the ton and
competing in a bidding war for good farmland up to $10,000 per acre. Why?
Because of the use of corn for ethanol, overproduction was reduced and despite the
increase of yields from 150 bushels per acre to 175 and pushing toward 200 in
southern Minnesota. Was this foreseen 15 years ago? Did this have anything to
do with energy prices?
Yes, and no. It was expected increasing use of
corn would increase the price, but the price of gasoline has been steady and
has dropt when weighed against the price index. Yes we did see $4.00 gasoline
in 2006, but that was caused by a mismanaged war in the Middle East and had
nothing to do with potential supplies.
So what happened with the expert opinions made
at the Vision 2020 conference? Simply the lack of vision of the developing
technologies. I will use examples to illustrate the point.
The first is the more efficient use of liquid
fuels. When evaluating agriculture tractors, the test at Nebraska uses a number
called HP-hr/gal, an indices of efficiency. A John Deere 4020 (about a 100
horsepower) gasoline got 7.8 HP-hr/gal and diesel, using less refined fuel
(less energy to refine) would get 11.8 HP-hr/gal. A 2012 8335R John Deere
tractor (about 300 horsepower) gets 18.9 HP-hr/gal. T
That is 250% increase over the gasoline 4020
and 150% over the 4020 diesel. These efficiencies are only part of the story growing
a bushel of corn. Because off less herbicide use, less tillage is used. Because
of GPS on the new the 2012 John Deere, tillage overlap is eliminated as well as
planting overlap, further increasing savings. Since corn yields have increased
further efficiency are gained. Now we get more corn per acre with less energy
input.
The efficiency in agriculture tractors also has
taken place in trucks hauling freight. A truck that was getting 4 miles per
gallon now gets 6 miles per gallon. But this technology is having effect on
automotive transportation in general. It is the development of the high-pressure
electronic fuel injection and the piezoelectric valve.
In the year 1997 we had
mechanical fuel injection and manifold injectors for gasoline engines. Neither was
very efficient. In the year 2000, high pressure (25,000 psi) electronic fuel
injection and the piezoelectric
valve diesel engines was introduced to the United States in the Mercedes Benz
and Volkswagen cars. See my own experience in preceding Blog entry. But this is
the beginning. Today we can buy several cars that hover or exceed 40 MPG. None
were available in 1997. And with the
employment of spark ignition engines utilizing precisely timed direct injection
into the cylinder, efficiency has significantly increased. This is best
reflected in the 2013 Ford Fusion. With
the least complex car mileage is 36 MPG, and with a fully equipped hybrid-plug
in MPG equivalent are about 80. This is a luxury car with power front seats,
GPS (with GPS you get lost less often), two cell phone connections to the car
phone.
Another example of energy
efficiency was reported in the Minneapolis Star Tribune. It was about a
trucking company using natural gas in trucks hauling freight. At 25,000 psi
natural gas is a liquid and can be used like diesel fuel in a compression
ignition engine. And there are many more examples of efficiency to alleviate
the energy shortage forecasted fifteen years ago.
Also unseen fifteen years ago
was a change in production of energy. The biggest impact was from a
technological development called “fracking”. I will not explain the process (just
google fracking) but I will explain the impact on energy production. First, it has increased the production of
natural gas to the point it has driven the price down to the point of “to cheap
to produce”. The fracking process is also used in oil extraction. The fracking
process and drilling technology has opened up the Williston Basin in North
Dakota.
In the Williston Basin production
has increased from 246,000 barrels a day two years ago, too 800,000 barrels
today, and forecasted to produce 1,000,000 barrels per day or 8% of the world daily
production.
And recent data off daily
gasoline usage has shown a reduction in 2011, despite a growing economy. This is technology at work.
Energy is not price regulated. It
is priced at what people will pay and what competition allows. It is also easy
to imagine, if technology had not increased the efficiency of fuel used for
production and transportation, we would be paying $6.00 for a gallon of gasoline. That would be price regulation.
