Your Government at Work--New USDA Biofuels Report

The USDA issued a new Biofuels Strategic Report that really shows the distinction between the real world and the government. The underlying analysis is that to meet the 36 Billion gallon goal of RFS2 that the US would have to construct 527 biorefineries, sprinkled around the US, which would each have a production capacity of 40 million gallons per year and would cost $320 Million each to construct.

Later in the same report, the authors say that only biorefineries with annual production in excess of 100 million gallons per year could benefit from pipelines. All smaller plants would have to TRUCK their production around the US. Funny how the report didn't include the carbon footprint of 527 biorefineries trucking their output all over the US! I get that they want the economic impact to be spread all over the US, but that fundamentally doesn't make sense any more than building hundreds of mini-mills.

I have a fundamental ethical problem with taking food out of people's mouths to burn in cars. The idea that half the projected biofuels supply would still come from corn, and among the other half some would come from soybean oil, is repellent to me. Of course I realize that this report was written by the Agriculture Department and their patrons/advocates are obvious, but I think that the sources lack creative thinking. They projected only small amounts of biofuels coming from municipal waste streams and woody by-products. Plants to process those streams shouldn't cost much more (if at all more) than what the USDA is projecting at $8 per gallon construction cost for its biorefineries.

You can decide for yourself. Here is the report in its entirety

All These "Resources" in Afghanistan

I saw this morning's article in the New York Times about Afghanistan purportedly having vast mineral resources http://www.nytimes.com/2010/06/14/world/asia/14minerals.html?src=me&ref=general and I thought about it for seven hours as I drove across the Saudi Arabia of the United States, aka Wyoming. Now I am NOT a geologist, but I have lived in an extraction state for a long time. How could a dollar value be put on a resource determined largely by fly overs? Here in Wyoming, you gotta drill lots and lots of test holes and then figure out if you can get the mineral or metal out of the ground cost effectively. Just because there is lithium in a mountain playa in Afghanistan doesn't mean it can be cost effectively extracted unless it is in a slurry, as the global low cost players have in South America. Just look at all the Nevada venture lithium plays that are effectively high cost hard rock operations. Okay, the presence of China in a deal for copper tells me that they know something is in the ground over there, and it is reasonable to believe that there are other metals and minerals that typically occur near copper, so maybe that is real. All I know is to declare a value on a resource without a NI43-101 resource calculation will get you time in the SEC jail for misrepresentation. I guess that our Federal Government can make declarations just like Bre-X and get away with it. Fortunately, by the time I got home, I found this blog post of Foreign Policy. I am not alone in my skepticism on the timing and real purpose of this story. You can check it out here: http://blog.foreignpolicy.com/posts/2010/06/14/say_what_afghanistan_has_1_trillion_in_untapped_mineral_resources