All the Agribusiness want tobe the next oil/energy mega Corps. Before long, big oil (private like ExxonMobile or government like the Saudis) will start snapping them up using their cash from profits. That is if they are not asleep at the wheel/nieve/unleash Hezbollah or Al Qeada to disrupt the move to biomass and away from oil.

There is a fundamentally different scale of economy at work in biofuel production, when compared to petroleum production. This will limit the ability of any one actor to corner the market.

Conventional ethanol feedstocks include (1) starch and (2) thermal energy for the distillation process. In this country, nobody has a monopoly or near-monopoly on either of these two commodities, or on the infrastructure needed to transport them or convert them to biofuel. The moment some oil company snaps up ADM's energy assets and tries to do anything funny with them, another farmer's cooperative will get together and build a new distillery.

By contrast, oil fields are vastly more complex and capital intensive operations, and also tend to be subject to long-term exclusive government mineral leases. The barriers to entry are vastly higher, and supplies have also by now become scarce, relative to demand. Industry consolidation has reduced the market to an oligopoly. Moreover, much of the world's oil reserves and pumping capacity lie in countries that exert government controlled monopolies over petroleum exploitation.

That's part of the reason why energy-efficient biofuels are viewed as a form of energy security. Not only can they be produced in America -- a point that already gets plenty of attention -- but in our domestic setting, no firm can likely obtain market power over biofuel production and price. Production of the basic feedstocks is highly dispersed and decentralized, and the barriers to entry (cost of erecting a distillery or biodiesel plant) are relatively small. In this sense, biofuels represent security against both geopolitical instability and corporate overreaching.

A curious problem would arise if a process to create cheap cellulostic ethanol were devised and then patented by a private firm. They could flood the market with cheap ethanol to drive corn-based producers out of business, and then cut back on production to raise prices and charge monopoly rents. As long as they kept prices slightly below what corn-based producers (or gasoline substitutes) would need for profitability, no competition would arise from that sector. Their patents would protect them from rivals trying to mimic their technology directly. Meanwhile, the consumer would be best off if production were somewhat higher and prices somewhat lower, which the technology could theoretically permit, but the monopolist would maximize profits by squeezing the consumer.

This happened once before, with the rise of the Standard Oil monopoly. The same trust-busting methods that worked then would work again in the future. Other options, such as compulsory license schemes or even outright government appropriation (with compensation) of the patent would also work. But I will wonder aloud as to whether our political system is now better or worse able to resist regulatory capture, relative to how we performed in the past.

it is only partially true that anyone can get into the game of ethanol production. many of the new advances in the biotech for increasing the production efficiency involve engineered organisms developed by large companies.

this is especially true for the cellulosic ethanol, which promises to enter the market at a price point that will shut down mom&pop ethanol production.

Just thought I'd run some numbers on this one.

If ADM have 22% of the ethanol capacity and (can) produce 1040 million Gal, then the total US output is, presumably, 4727 mil gal/yr.

If the average US car gets about 25mpg (yes, optimistic I know...)whilst running on gasoline, then it would get approx 15.8mpg, whilst running on pure ethanol.

Assuming 12000 mile per car per year then your total per car consumption is 759 gal ethanol per year per car.

So the total (theoretical) US ethanol output could support = 4727mil / 759

= 6.2 million cars.

Not bad, that just about might cover the entire car population of Scotland, where I come from.

Having said that it'll go a good bit further if used as E5 or a little bit further if used as E85.

Andy

Ah, yes my mistake you're right.

So that means that the total US ethanol output could run about 9.7 million cars on pure ethanol.

How many cars are there in use within the US?

Andy

136 million automobiles as of Oct 2004.
231 million total on-highway vehicles.

http://www.fhwa.dot.gov/policy/ohim/hs03/htm/mv1.htm

When it is all said and done, Iran and Saudi Arabia (and/or elements within) will be shown to have control/influence over these terrorist groups. A vast and concerted effort by Europe, US, and Japan/East and South Asia will drive the demand for Petro DOWN. This will undermine the underpinnings of these Petrostates. They may either #1: freak out and send their goons to damage/destroy these alternative fuel plants, or #2: buy them and their patents ouright. The Iranians may go for #1 (due to sanctions and frequent apocalyptic tendancies w/the cover ops capabilities of Hezbollah) while the Saudis and the rest of the OPEC may go for #2.

One word: BUTANOL
www.butanol.com