View Full Forums : Lesser of two evils? WalMart vs. OPEC


Stormhaven
08-09-2006, 02:02 PM
Very interesting article on WalMart's current idea to offer E85 Ethanol
http://money.cnn.com/2006/08/08/news/companies/pluggedin_gunther.fortune/index.htm

Panamah
08-09-2006, 02:22 PM
I'd take WalMart over OPEC any day. :p

B_Delacroix
08-09-2006, 03:26 PM
At the least, Walmart doesn't have an inherent interest in seeing my way of life destroyed. Members of OPEC can't make that same claim.

Teaenea
08-09-2006, 03:36 PM
Walmart will one day rule the world.

Tudamorf
08-09-2006, 05:26 PM
Let's see. One the one hand, we have a cartel interested in pumping garbage into the atmosphere while they fund terrorists. On the other hand, we have corporate America using its might to do good for the enviornment, for a change.

Tough choice. <img src=http://lag9.com/rolleyes.gif>

I'd love to see the Middle East be put out of business; it would solve a lot of problems in the world today.

Aidon
08-09-2006, 06:12 PM
I think in this instance, I would waive my boycott of Walmart. When weighing the minimal effect buying gas once a week would have on Labors efforts to unionize walmart against the benefits of filling my tank with 85% ethanol, thus reducing money which goes to Oil companies and Arabs and increasing the money which goes to wholesome American farmers...I have to say I'd buy the 85% from WalMart if they were the only place to offer it conviently.

Anka
08-09-2006, 07:14 PM
If Bush wants science led solutions to pollution, he should give tax breaks to vehicles and fuels which use new science. The same incentives that are given to oil companies to develop supplies could also be given to those trying to cut consumption.

The one problem I can see with this technology is that it looks like a temporary solution. I'm not convinced that this would be the best available fuel in ten years time. Any investment in specialised engines and infrastucture will be a risk.

Fyyr Lu'Storm
08-09-2006, 07:34 PM
Gas is still less expensive that milk or bottled water.

That said, I agree with Anka, that public incentives to oil companies should be dwindled off.




Then oil fields under US soil(seabeds) should be nationalized, eventually, and the profits should go to fund universal healthcare in the US. How about that bit of Communism from a Libertarian. So there! You guys have sold me.

Aidon
08-09-2006, 10:35 PM
Gas is still less expensive that milk or bottled water.

Um, normal milk here in Toledo is cheaper per gallon than gas and I'm drinking bottled water right now that's 65 cents per liter.






Then oil fields under US soil(seabeds) should be nationalized, eventually, and the profits should go to fund universal healthcare in the US. How about that bit of Communism from a Libertarian. So there! You guys have sold me.

Yes, yes, and yes.

And if need be, we should go kick Venezuala's ass and nationalize their oil too. Chavez is a putz.

Stormhaven
08-10-2006, 09:00 AM
Gas is still less expensive that milk or bottled water.

That said, I agree with Anka, that public incentives to oil companies should be dwindled off.
Jeebus Fyyr, what water and milk combo are you buying? Gas is like $3 and change here - a gallon of Poland Springs (which is the local Nestle water) is like ~$1.20, and milk is around the same ~$1.20. I guess it's more expensive if you're talking like Peligrino or some fancy brand like that. Even my Silk soy milk is under $2

Teaenea
08-10-2006, 09:57 AM
If Bush wants science led solutions to pollution, he should give tax breaks to vehicles and fuels which use new science. The same incentives that are given to oil companies to develop supplies could also be given to those trying to cut consumption.

Um, The Feds do give tax incentives to people buying Flex fuel, hybrid, electric and other "clean" vehicles.


The one problem I can see with this technology is that it looks like a temporary solution. I'm not convinced that this would be the best available fuel in ten years time. Any investment in specialised engines and infrastucture will be a risk.

Isn't that the same problem with any alternate technology? We don't know if Hydrogen is going to be the best available fuel in ten years time either. At least a flex fuel car can burn both gas and ethenol.

Thicket Tundrabog
08-10-2006, 11:42 AM
Lol.

Wal-Mart is merely a buyer/re-seller of fuel products, not a fuel producer, processor or distributor. Their part in any ethanol/gasoline market is tiny. Their involvement becomes miniscule if they have Murphy Oil manage the fuel business.

Comparing OPEC to Wal-Mart is like... ummm... comparing Kraft Foods to a neighborhood lemonade stand :) .

Wal-Mart won't do get into methanol fuel unless there is money in it. This can happen in many ways.

1. Marking up ethanol fuel the same way franchised gasoline stations currently do. I doubt they would do this. They are not in the fuel business and are unlikely to want to get into it. They will either have a partnership (e.g. Murphy Oil) or will lease out land to contract companies to manage their fuel sales.

2. Selling ethanol fuel cheaply as a loss leader to get customers to buy stuff at their stores. (There is a long history of large department store and grocery chains doing this with gasoline.)

3. Increasing sales at their Wal-Mart stores because of the positive public image from selling 'environmentally-friendly' fuel. Heck... if they can convince Aidon to change his buying habits, they can convince anyone :)

Anka
08-10-2006, 12:10 PM
Supermarkets have a 25% share of petrol sales in the UK. Walmart would probably be very satisfied if it can get that anything close to that market share in the US.

Stormhaven
08-10-2006, 01:35 PM
Thicket, I think you underestimate WalMart's role in the open market. WalMart is not just a distributor, they control so much of the market share of various goods that they will set the cost themselves. If WalMart goes full-in into the fuel game, they will not be the nice guys on the block. WalMart's soul goal will be to control the majority of fuel distribution. It's probably one of the few companies out there that can actually mount a challenge to someone like Exxon-Moble. As an "for instance," WalMart told Company_A (I think it was Rubbermaid) that their cost on Item_A will be $xx, the hell with the actual manufacturing cost. If the company chose not to sell them Item_A for $xx cost, WalMart would not sell any of their products in any of their stores. WalMart stores consisted of something like 90% of the Company_A's total US sales, so therefore could not refuse. It got to the point where Company_A was losing so much money selling to WalMart that they decided that it was better to lose 90% of their sales than to keep selling at a loss.

The above is not a unique situation, if you know anyone who've worked with WalMart Corporate, they will all tell you the same thing, they are ruthless and will not give an inch. The reason they have the lowest prices on the market is because they force their suppliers to give them the lowest cost, often resulting in a short-term (or sometimes long-term) loss.

Thicket Tundrabog
08-10-2006, 01:59 PM
You're right in your examples Stormhaven. Wal-Mart is a prime example of ruthless price imposition on manufacturing companies.

This approach will have limited success in motor fuels. You can bully a manufacturing company, but the same approach will not work with a capital intensive company. Wal-Mart is NOT a capital intensive business. Their capital is primarily in their inventory. Beyond that, they own land and buildings. In my opinion, they won't have the muscle to play a dominant role in the energy business. Furthermore, I don't think they want to enter that business in a big way. (A few thousand ethanol stations run by contractrors is NOT big).

Any joe with a bit of money can own and run a store or a gasoline station. They may or may not be successful, but they can do it. It's a lot different owning and running refineries, pipelines and distilleries (ethanol production). The fuel distributor is the tail, and it won't wag the dog.

Oh... and anyone who thinks that ethanol from corn can economically compete with gasoline from oil is dreaming in Technicolor. Wal-Mart can negotiate and bully to their hearts content, but you can't get blood from a stone. More likely they'll be looking for government (taxpayer) handouts for promoting environmentally clean fuel.

Most likely, this is all speculative stuff and will be old, irrelevant news in a few months.

Aidon
08-10-2006, 03:18 PM
Why can't ethanol compete with oil?

Jesus, the US could grow a whole ****load of corn if it needed.

Our government actively pays farmers not to grow corn so that the market doesn't nosedive driving every corn farmer on the planet into poverty.

(Not that I'm doubting your assertation, you know far more about this field than I. I am asking the reason).

Stormhaven
08-10-2006, 03:36 PM
I have no idea what the corn to ethanol ratio is, but having just visited corn country myself, I know that a crapload (crapload = truckloads for your metric folks) is getting thrown out or given out free every day. Also, if you read a bit further down in that article, it talks about a different type of ethanol that results from using corn husks and other waste materials, so that the production of ethanol doesn't directly compete with a food source (but I think it said that type of ethanol is still a few years away from mass production).

Teaenea
08-10-2006, 04:14 PM
Keep in mind, Ethanol isn't just from corn. It can be had from anything with sugar content. Sugar beets are a very viable source. Brazil gets it's Ethanol from Sugar cane. I'm not sure if it's the same for Beets, but Sugar cane is a better source of Ethanol than Corn. It produces much more fermentable sugars. So, I'm guessing Sugar beets are similar.

Panamah
08-10-2006, 05:15 PM
I thought it was anything with cellulose. They're talking about using things like corn husks, switch grass, etc.

Aidon
08-10-2006, 07:16 PM
Keep in mind, Ethanol isn't just from corn. It can be had from anything with sugar content. Sugar beets are a very viable source. Brazil gets it's Ethanol from Sugar cane. I'm not sure if it's the same for Beets, but Sugar cane is a better source of Ethanol than Corn. It produces much more fermentable sugars. So, I'm guessing Sugar beets are similar.

Probably, but we can grow much much more corn than beets or sugar cane in the US.

Thicket Tundrabog
08-11-2006, 07:31 AM
From a chemical perspective, you can make ethanol a variety of ways. The easiest way is fermentation of sugars. It's the same approach as making wine. Sources include sugar cane, sugar beet, sweet sorghum and fruits.

Starches are more complex sugars that must be broken down into simpler sugars before fermentation into ethanol. This is also fairly easy. Whiskey and vodka are examples of this. Sources include cereal grains, potato, sweet potato, corn, wheat and cassava.

Finally, cellulose molecules are complex sugars that are very difficult to break down to simpler sugars. There are three major processes for breaking down cellulose - acid hydrolysis, enzymatic hydrolysis, and thermochemical. All are difficult and costly. Cellulose feedstock is very plentiful -- trees and plant material.

Ethanol from sugar and starches competes with human food requirements. Realistically, ethanol from cellulose is the only process with the potential for widescale production of motor fuels. Technological improvements are required to make this an economical alternative.

Aidon
08-11-2006, 09:49 AM
Ethanol from sugar and starches competes with human food requirements. Realistically, ethanol from cellulose is the only process with the potential for widescale production of motor fuels. Technological improvements are required to make this an economical alternative.

If that's the reason then I disagree.

We can produce enough corn in the US to feed ourselves and our cars multiple times over, I suspect.

Teaenea
08-11-2006, 10:08 AM
Sugar cane, obviously, isn't going to be growing in most of the US. Sugar beets on the other hand can be grown just about anywhere in the US. While we can produce plenty of corn, we can produce more ethanol from sugar beets while using much smaller area's of land. Still that shouldn't be a problem anyway. US farmland usage has dropped significantly over the past 50 years due to better fertilizer, GM crops, and better pesticides. In its ability to grow crops, No one can touch the sort of production the US can reach.

Thicket Tundrabog
08-11-2006, 10:51 AM
Ok... lets look at some numbers.

Data:

* The U.S. produces about 40% of the world's corn. (1990 data, so may be outdated. My point is that the U.S. is a huge producer of corn.)

* The U.S. produces 660 billion pounds of corn a year (2004 data)

* The U.S. consumes 146 billion gallons of gasoline a year (2005 data)

* 20 pounds of corn produces 1 gallon of ethanol

Conclusion:

If ALL U.S. corn was turned into ethanol for fuel, it would provide about 23% of the nation's fuel.

Or, put another way, if you doubled American corn production and turned the extra corn into motor fuel, you could provide 23% of the nation's fuel.

One source says that 4% of American corn is currently converted to ethanol.

Simplifying assumptions:

1. 1 gallon ethanol = 1 gallon gasoline. This is actually not true, since ethanol has a lower heat content than gasoline.

2. You consume about 40 percent to distill ethanol --> i.e. for every 10 gallons of ethanol, you burn 4 and are left with 6 gallons for motor fuel. Alternatively, you have to use another source of energy to distill the ethanol. I didn't factor this in to my calculations.

For an entertaining read, see the following. This guy considers ethanol producers and lobbyists as American traitors :) .

http://ergosphere.blogspot.com/2005/09/ethanol-mirage.html

Here's another interesting site about a cellulose to ethanol scam. While cellulose to ethanol has great potential, there is currently NO commercially viable production.

http://i-r-squared.blogspot.com/

... and finally going full circle... don't be naive and gullible about Wal-Mart hype on selling ethanol-based motor fuels. It is fanciful fiction preying on public ignorance.

Thicket Tundrabog
08-11-2006, 12:00 PM
I decided to start a new post instead of continuously editing my last post.

Here's another interesting site on ethanol.

http://www.igreens.org.uk/ethanol_from_corn_.htm

Key points are;

1. Current ethanol production is heavily subsidised (I believe it's 53 cents per gallon direct subsidy).

2. It takes 131,000 BTU to make a gallon of ethanol, which has only 77,000 BTU in it. You lose 54,000 BTU per gallon for the pleasure of using ethanol motor fuel.

3. Based on 2004 data (before the latest rise in oil prices), it takes $1.74 to produce a gallon of ethanol compared to $0.94 to produce a gallon of gasoline. Note that most of the $1.74 cost is energy.

4. The most poignant part is "If ethanol from corn is so cost effective, why does its production need federal subsidies?"

Of course, perhaps Americans prefer to pay higher taxes instead of higher fuel prices.

Ethanol motor fuel --- fool's gold (fuels gold?)... at least until cellulose to ethanol technology is developed... but researchers have already been trying for decades.

Fyyr Lu'Storm
08-11-2006, 12:12 PM
4. The most poignant part is "If ethanol from corn is so cost effective, why does its production need federal subsidies?"



I am sure the point of ethanol is to take the place of petroleum when it actually becomes more scarce(more expensive).

The subsidies are not for NOW ethanol, but in 50 years from now. If in 50 years we actually need ethanol, the production system will have been already built. Thus the transition will be less hard.

That is the rationale behind subsidies for solar PV technology, at least.

I think my question is how much petroleum is going, or is going to go into that gallon of ethanol.

I still like my idea of genetically engineering algae and bacteria to produce sugars to ferment. You can take huge barren lakes like Mono Lake or The Great Salt Lake, aquaform them into aquafarms and grow sugar that way.

If we can produce bacteria to produce complex proteins(insulin), we certainly can do it for sugar production.

Thicket Tundrabog
08-11-2006, 12:58 PM
I am sure the point of ethanol is to take the place of petroleum when it actually becomes more scarce(more expensive).

Yup.

Energy is plentiful. It's just a matter of what you are willing to pay. Besides oil/natural gas/coal there's nuclear, wind, solar, tidal, biomass, geothermal and probably a few more. All are renewable or essentially inexhaustible.