Update On Ethanol -- October 6, 2014

A reader sends links to these two articles on ethanol.

McClatchyDC is reporting:

Ethanol producers are pushing back hard against new rail safety rules after a federal study found that ethanol poses hazards equal to or greater than crude oil in rail transportation.

An analysis of tank car damage in derailments published last month by the Federal Railroad Administration found that tank cars carrying ethanol were 1.5 times more likely to explode when exposed to fire for prolonged periods. The Renewable Fuels Association dismissed the report, blaming track defects for the explosions.

Like almost everything else that matters, Congress has ceded authority to bureaucrats. It will be interesting to see how this plays out.

When I was in the Air Force years ago -- this would have been back in the late 1980's -- medical care was getting more and more expensive for DOD. There were legitimate concerns whether Tricare would survive. I remember the USAF Surgeon General speaking on numerous occasions telling us that it would be the retirees that would "save" Tricare for military active duty as well as for retirees.

He turned out to be correct. ObamaCare was modeled after Tricare, and Tricare is still around. General Charles Roadman, II, perhaps one of the best surgeons general the Air Force ever had.

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Food For Fuel

The other story: The StarTribune is reporting that ethanol farmers are having a tremendous year.

It’s shaping up to be one of the best years ever for the ethanol business.

Operating profits for many ethanol makers more than doubled in the second quarter compared with last year, reflecting lower prices for corn and strong demand for the fuel, sustained partly by exports.

Valero Energy, which owns 11 U.S. ethanol plants, including one in Minnesota, reported operating income of 63 cents per gallon, more than double that of the quarter a year ago.

“It’s nice to have that,” said Brian Kletscher, CEO of Highwater Ethanol, a farmer-owned producer in Lamberton, Minn., whose operating profit more than doubled and net earnings rose 64 percent for three months ending in July. “The ethanol industry needed margins like this to stabilize.”

Just two years ago, the nation’s 212 ethanol plants, including 21 in Minnesota, saw profits take a free fall as the price of corn climbed in some regions to $8 per bushel. More than 20 U.S. ethanol plants were shuttered, though many have reopened, including a plant in Buffalo Lake, MN, earlier this month.

Only one minor complaint/concern: 

Transportation also poses a lingering problem. To reach markets, ethanol relies heavily on railroads, which are congested by oil trains, grain and coal shipments and other traffic. Kletscher said some plants, including Highwater’s, have shut down production for a day or more because transport was unavailable and on-site storage tanks were full.

But it's the corn farm states -- Minnesota, Iowa, and Nebraska -- that are killing new pipelines. At the end of the day, these states prefer CBR over pipeline.

Dreamboat, Eleni Mandell