VISION 2020 FIFTEEN YEARS AGO

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.