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| University of Missouri examines biofuel risk & reward |
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| Monday, 24 July 2006 | |||||||||||||||||
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Pat Westerhof presented a paper on 18th July at the University of Missouri Food and Agriculture Research Institure (FAPRI) entitled "Biofuels: An Agricultural Revolution?".
In the presentation Mr Westerhof points out that ethanol production more than doubled from 1.75m tons in 2001 to 3.75m tons in 2005.
In consequence, corn used as ethanol feedstock also doubled from 0.7b bushels to 1.6b bushels over the same period.
This is a 14% share of total US corn production dedicated to ethanol production.
In 2006/7, the USDA expects 2.15b bushels of corn to be used, making a 34% annual increase in corn consumption for ethanol.
The figures for corn consumption and ethanol production are far higher than USDA estimates made only 1 year ago, mainly because high oil prices have spurred ethanol investment.
As a result of this, FAPRI's January estimate of 7 billion gallons of US ethanol production by 2010 has been revised upwards to 9.5 billion gallons, a doubling of 2005 production figures.
Although Mr Westerhof does not make the same detailed analysis of US biodiesel production figures, he does make the following analysis of the ratio of ethanol and biodesel feedstock to that of the finished price:
Ethanol:
Biodiesel:
* assumes 2.77 gal/bushel of corn
** assumes 7.7 lbs veg oil/gal Finally, Mr. Westerhof points out the major risks for biofuel refiners, namely a downturn in oil prices and/or a shortage in feedstock supplies and hence price caused by drought or political disturbance.
www.fabri.missouri.edu
David Smith, Singapore
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