The U.S. now has mandatory bio-fuels requirements for gasoline and soon for diesel. This is a very bad idea and the consequences will soon be apparent.
Farmers know that farming and crop production are not reliable - some years produce good crops, other years do not. Even if a growing season is long enough and warm enough (more on that later), a bad year can be caused by (among others), flood, drought, hail, insects, and blight. Then, if none of those occur, untimely rain can cause the fields to be too wet to plant or too wet to harvest when the soil becomes too soft due to the rains. See here and here for current assessments of the farmers' plight.
A late frost can delay planting, and an early frost can ruin the crop before harvesting. Farmers made up for some of these issues by planting amazing seeds that yield many more bushels of product per acre than in the past. Proper use of fertilizers, herbicides, and pesticides also remove some of the risk. Irrigation also helps to ensure the proper amount of water applied at the correct times for optimal yield. Yet, no one can control the rain, or hail, or frost. So, even if a farmer does all the right things at the right time, he can still end up with no crop to sell. And, where corn for ethanol is the crop, there will be no ethanol for blending into gasoline. The same is true of crop-based bio-diesel, such as from soy beans.
This year, 2009 summer, has farmers in the U.S. Midwest anxious about an early frost. The planting season was delayed one to two weeks in many areas this year, due to inclement weather. Or was it a climate change? No matter what label it is given, the fact remains that the crops were not planted as early as usual, therefore they cannot be harvested when they normally would. If the weather predictions are true, that this winter will be severely cold and long, an early frost may occur and eliminate much of the crops this year.
There have already been several days in late August where large portions of the northern states experienced frost. A few more of those in the next two to three weeks and the ethanol for next year may be very difficult to obtain.
On the other hand, oil wells produce around the clock, with no concern for weather or climate. Refineries run 24/7, each day of the year. Natural gas is weather-independent, also, and therefore has yet another reason to be the transportation fuel of choice.
None of this should come as a surprise. At least as far back in time as Joseph of Egypt, and the Pharoah who had a dream about seven lean cows that ate seven fat cows, famines due to crop failures were known. Not much has changed, except the wisdom of the leaders and decision-makers.
The normal manner to handle variation in supply is with storage, or inventory. There is an inventory for ethanol in the U.S., and per the EIA there are approximately 14 million barrels of fuel ethanol in storage at this time. However, that represents merely 17 days of demand, given that U.S. gasoline demand is approximately 8 million barrels per day, and ethanol content is approximately 10 percent. There may be corn storage at corn refineries.
UPDATE 1 (Sept 15, 2009): An early frost prediction for late next week has corn futures rising, and corn farmers worried. "Corn is lagging in maturity with USDA estimating that only 12% of the crop is mature versus the five-year average of 37%" And so, we see the new life we live. Gasoline blended with ethanol made from corn that is not reliable due to shortened growing seasons and early frosts. Who will the government penalize, when there is not enough ethanol to meet the increasing mandates? The farmers? The ethanol refiners? The coal plants' owners for pumping out all that global-warming CO2?
UPDATE 2 (Sept 27, 2009): And the frost is on the way, tonight. Western Nebraska is predicted to have a hard freeze, which will kill crops. See image below.
UPDATE 3 (October 13, 2009) The killing freeze occurred before the crops were mature this year in the farm belt of the U.S., as shown in this article. From the article, "About a quarter of the country's corn will leave the field immature [due to the killing freeze]. As of this past weekend, about 3/4 of the nation's corn crop is fully matured, according to Tuesday's USDA Crop Progress report. That's almost 20% more than a week ago, but still almost 20% below the previous 5-year average.
Corn harvest is at a similar pace: 13% of the corn crop's out of the field, versus the previous 5-year average of 35%." It is a very good thing that there is plenty of oil for manufacturing gasoline, and natural gas for powering CNG vehicles. It is a very bad policy to rely on weather and agriculture for our nation's energy security. This year's harvest is a prime example.
