tag:blogger.com,1999:blog-73593634491293368962024-03-08T04:55:50.122-08:00Prisma Advisors LLCPrisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors. Founders Roger Bushue and Ron Miller have over eighty years of business and management experience ranging from startup companies through running a Fortune 1000 business.
Creating value with experience and integrity.
www.prisma-advisors-llc.comUnknownnoreply@blogger.comBlogger10125tag:blogger.com,1999:blog-7359363449129336896.post-90820177910626657472012-11-28T16:32:00.002-08:002012-11-28T16:36:21.737-08:00In Defense of Trash<br />
<br />
<br />
This week, in a rare show of bipartisanship, the U.S. Senate voted 62-37 to back military aviation biofuels. This means the "Green Hornet" will continue to fly despite objections from fossil fuel supporters.<br />
<br />
The Department of Defense consumes 4.6 billion gallons of fuel per year making it the largest single<br />
consumer of energy in America. With operations stretched all over the globe, the Air Force and Navy<br />
consume about 85% of that total combined. Therefore the DoD has a strategic interest in fuel diversity<br />
and security, especially in times of crisis.<br />
<br />
The United States generates about 250 million tons of Municipal Solid Waste each year of which about<br />
a third is recovered through recycling programs, etc. Another 13% is combusted for energy recovery,<br />
leaving about 135 million tons going to landfills each year. There is sufficient organic material in that<br />
MSW to generate well over 5 billion gallons of biobutanol (jet fuel) - more than required to meet the<br />
military's needs. Obviously biofuels will not entirely replace fossil fuels but the potential is there with<br />
existing technology.<br />
<br />
Today we are building mountains of trash for our children and grandchildren. MSW processing facilities can take that trash and immediately convert to it to usable biofuels. The landfills will do the same but it will take centuries to recover. Sounds a little like fossil fuels doesn't it?<br />
<br />
While this week's vote has no direct impact on MSW, the Senate has reaffirmed the importance of<br />
biofuels in the nation's energy mix and in particular this nation's defense. Creating a market opportunity<br />
such as this should spur continued investment in biofuels with all its intended benefits. Hopefully an<br />
unintended consequence will be the elimination of landfills and a more beautiful America.<br />
<br />
Ronald H. Miller<br />
<br />
Ronald H. Miller is Managing Director and co-founder of Prisma Advisors, LLC a management advisory<br />
firm specializing in advanced biofuels. Mr. Miller has over four decades of energy experience, including<br />
CEO of a Fortune 1000 producer of biofuels and food products from agriculture.<br />
<br />
November 28, 2012<div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-49989942320984969292012-07-26T21:32:00.000-07:002012-07-26T21:32:52.777-07:00Big Oil's Stolen 35 MinutesBy Ronald H. Miller<br />
<br />
<br />
A recent article entitled "Clean Green Scam" highlighted the case of Rodney Hailey whose company sold <span style="background-color: white;">approximately $9 million worth of fraudulent biodiesel credits to the oil industry. Petroleum companies </span><span style="background-color: white;">need those credits to show compliance with the national Renewable Fuels Standard. Mr. Hailey was </span><span style="background-color: white;">convicted of 42 counts of fraud, money laundering and other charges and will likely spend several years </span><span style="background-color: white;">as a guest of the federal government. Justice was served, right? Not so, stated the article. What about </span><span style="background-color: white;">the innocent victims, in other words "Big Oil"?</span><br />
<br />
The focus of the article was on "Washington's torrid 40-year love affair with the ethanol lobby".<br />
The "victims" not only paid $9 million for bad biodiesel (not ethanol) credits but also were fined by<br />
the EPA for not conducting proper due diligence to make sure the credits were legit. This cost Big Oil<br />
another $40 million. In fact the article went on to say, "Refiners have been ripped off to the tune of<br />
$200 million so far by crooks and government fines..." due to the Renewable Fuels Standard. Wow, that <span style="background-color: white;">is a big number - unless of course you put it into context.</span><br />
<br />
In 2011 the Big Five oil companies (ExxonMobil, BP, Chevron, Shell and ConocoPhillips) made $139<br />
billion in net profit. That is equal to $375 million per day or $261,000 per minute. These five companies <span style="background-color: white;">also received $6.6 million per day in federal tax breaks. So let's reexamine the facts as to the victims' </span><span style="background-color: white;">pain with biofuels. First of all, the actual scam cost 35 minutes of Big Five profit. The total cost of </span><span style="background-color: white;">crooks and fines over the past 7 years of the program is equal to about 13 hours of profit. But I wouldn't </span><span style="background-color: white;">worry too much about their pain and suffering. Federal tax breaks restored the "rip off" in about one </span><span style="background-color: white;">month.</span><br />
<br />
Why expend all this effort to gain media time for a relatively small amount? The real rip off is the<br />
$1.09 per gallon saved last year by American consumers because of the Renewable Fuels Standard.<br />
That's $140 billion that went to consumers and not Big Oil - equal to the total net profit of the Big Five.<br />
Now that's a big number and certainly worth fighting for. This isn't about the stolen 35 minutes from<br />
biodiesel. It's about a year's worth of profits being shifted from Big Oil to the American consumer due<br />
to increased competition from renewable fuels. It's all about spending whatever money it takes to<br />
reverse the rip off and restore order to the 150 year old fossil fuel status quo.<br />
<br />
When you see more articles like the "Clean Green Scam", and you will, just remember to "Follow the<br />
Money" to see where the real scam lies.<br />
<br />
<i><span style="font-size: x-small;">Ronald H. Miller is Managing Director and co-founder of Prisma Advisors, LLC a management advisory <span style="background-color: white;">firm specializing in advanced biofuels. Mr. Miller has over four decades of energy experience, including </span><span style="background-color: white;">CEO of a Fortune 1000 producer of biofuels and food products from agriculture.</span></span></i><br />
<br />
July 26, 2012<br /><div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-87213987949976138022012-05-29T18:03:00.003-07:002012-05-29T18:03:54.978-07:00IN DESPERATE TIMES FOLLOW THE MONEY<b id="internal-source-marker_0.9512261124327779" style="font-weight: normal;"></b><br />
<div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: center;">
<b id="internal-source-marker_0.9512261124327779" style="font-weight: normal;"><span style="font-family: Calibri; font-size: 15px; font-style: italic; font-weight: bold; vertical-align: baseline; white-space: pre-wrap;">by Ronald H. Miller</span></b></div>
<b id="internal-source-marker_0.9512261124327779" style="font-weight: normal;"><span style="font-family: Calibri; font-size: 15px; font-style: italic; font-weight: bold; vertical-align: baseline; white-space: pre-wrap;"></span><br /><span style="font-family: Calibri; font-size: 15px; font-style: italic; font-weight: bold; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">Desperate times call for desperate action. That is the situation facing Big Oil at the moment. After spending billions and billions of dollars to extract increasingly expensive oil out of the ground, USEPA is about to hand another 5% market share to its cheaper competitor, ethanol. Time to spend as much money as it takes to destroy the competition.</span></div>
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">The Coordinating Research Council (CRC), an oil industry front, recently issued a scathing study noting that 15% ethanol blends (E-15) are far more damaging and constitute a safety problem as compared to E-10, or good old E-0 which hasn't been seen in years. Never mind that NASCAR runs on E-15 and Indy Race Cars run on E-100. Never mind that Brazil has been running successfully on E-25 for over 3 decades. Never mind that USDOE, with significantly more test data on E-15, quickly debunked the CRC study noting their flawed science. It's an embarrassment for an industry that historically has relied on solid scientific data to prove its points. But unlike the past, times are now getting desperate.</span></div>
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">Last year consumers saved $1.09 per gallon because of ethanol. That's over $140 billion in savings - an economic stimulus in its own right. Today ethanol runs about $1.00 per gallon less than gasoline and, unlike oil, ethanol is not subsidized by the government. Congress has been strong about paring back or eliminating subsidies for alternative fuels but the massive 9-figure subsidy program for oil and gas has remained untouchable. One might want to "follow the money" to understand this situation better.</span></div>
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">For oil, it's like the little Dutch boy with his finger in the dike. We have reached a tipping point where ethanol is cheaper than oil and the spread is widening. This year U.S. farmers are going to produce a record 15 billion bushel corn crop, nearly 2 billion bushels more than the previous record. That's what happens when you create economic opportunity in a free marketplace. Our corn surplus will be the highest in years - that's food </span><span style="font-family: Calibri; font-size: 15px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;">and</span><span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"> fuel. And there many new sugar-based energy crops and new technologies for second generation advanced biofuels that require far less water and fertilizer and are available today. If you are the little oil Dutch boy, you can stand there and try to hold back the flood but in the end you will have to flow with the tide.</span></div>
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">Fortunately for America we will see E-15 and eventually E-25 just like Brazil. Renewable energy from the sun is sustainable and cheap while mined carbon out of the ground is essentially finite and increasingly expensive. Free market dynamics will determine the eventual outcome. In the meantime, expect to see a scorched earth campaign against alternative energies, funded by large multi-national oil firms with billions to spend to try to maintain the hundred and fifty year old status quo.</span></div>
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;">So, the next time you see an anti-ethanol study - Follow the Money.</span></div>
<span style="font-family: Calibri; font-size: 15px; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;">Ronald H. Miller is Managing Director and co-founder of Prisma Advisors, LLC a management advisory firm specializing in advanced biofuels. Mr. Miller has over four decade of energy experience, including CEO of a Fortune 1000 producer of biofuels and food products from agriculture.</span></div>
<span style="font-family: Calibri; font-size: 15px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;"></span><br /><div dir="ltr" style="margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">
<span style="font-family: Calibri; font-size: 15px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;">May 29, 2012</span></div>
</b><div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-35130868608975452232012-02-24T10:31:00.000-08:002012-02-24T17:15:28.978-08:00Gas Price Relief -- Now<br />
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Ronald H. Miller, 2012</div>
<div class="MsoNormal" style="text-align: justify;">
Prisma Advisors, LLC., www.prisma-advisors-llc.com</div>
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<br /></div>
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<br /></div>
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<br /></div>
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With gasoline prices soaring to
$4 and $5 per gallon, it is good to know that relief is available now, but only
if the President will act. His "all
of the above" strategy has merit.
New oil and gas production is not the answer, but it is part of the
solution. The Keystone Pipeline is not
the answer, but it is part of the solution.
Wind and solar the same. And
biofuels - to date ethanol has made the only significant renewable contribution
to energy security and a better economy.
We now enjoy nearly a million barrels a day of clean, renewable ethanol
production at the expense of those who hate America.. What's more, the U.S. Navy is not required to
escort this sustainable energy source to our gasoline stations.<br />
<br />
<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify;">
Today ethanol costs $0.90 per
gallon less than gasoline and it's not taxpayer subsidized like oil and
gas. That means an E10 blend is $0.09
per gallon cheaper than straight gasoline, and it has a higher octane performance
rating. We have a growing surplus of
ethanol in this country because of the artificial 10% blend limitation. ADM, the nation's largest ethanol producer,
just announced the closure of its North Dakota facility, a victim of swelling
supplies. Unfortunately that sends the
wrong signal of more energy dependence to say nothing of the devastating effect
on the local rural economy.<o:p></o:p></div>
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<br /></div>
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Languishing at USEPA is a request
to allow 15% blends of ethanol in the market place. Immediate implementation would reduce
gasoline costs by nearly a nickel a gallon.
Every little bit helps! EPA has
approved E15 for 2001 and newer vehicles and recent health effects testing
showed ethanol as a big winner. However
this bifurcation of the market is a barrier to gasoline stations moving toward
the higher blends. They must have
products that everyone can use. EPA
hasn't disapproved E15 use in older cars - they just have yet to complete their
testing protocols. Other independent
testing has concluded older vehicles run fine on 15% ethanol. Mr. President, it is time to move the
bureaucracy forward and bring E15 to market now in order to save cash strapped
consumers money and further blunt the influence of those who would harm us.<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify;">
In the next decade we will likely
move to 25% ethanol blends just as Brazil has been doing for the last 40
years. There are many new exciting,
sustainable feedstocks including cellulose, drought-resistant energy crops
grown on marginal land and trash which can be diverted from landfills into
useful energy products. These
technologies are on the cusp and need a ready market. Consumers need relief now. E15 approval is a win-win. "All of the above" will be judged
this election season by acts and not just words. The time to act is now!<o:p></o:p></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<i>Ronald H. Miller is Managing Director and co-founder of Prisma
Advisors, LLC a management advisory firm specializing in advanced
biofuels. Mr. Miller has over four
decades of energy experience, including CEO of a Fortune 1000 producer of
biofuels and food products from agriculture.<o:p></o:p></i></div><div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0Pekin, IL, USA40.5675388 -89.64065840.5192908 -89.719622 40.6157868 -89.561694tag:blogger.com,1999:blog-7359363449129336896.post-63332265436815868092011-04-05T14:19:00.001-07:002011-04-05T14:19:24.815-07:00The Rest of the Story....The Rest of the Story....<br />
by Ronald H. Miller<br />
<br />
As a young boy growing up in mid-century Kansas I remember Paul Harvey on the radio with "The Rest of the Story...". When it comes to renewable ethanol and the "food vs. fuel" debate it is time for "the rest of the story".<br />
<br />
USA Today, no fan of ethanol, noted in its March 18 article, "Hunger, despair for millions" that "The farm value of food - what goes to the farmer - is about 19% of the cost in the U.S., according to the U.S Department of Agriculture. The rest goes to labor, packaging, transportation, energy and corporate profits." USA Today goes on to take a swipe at corn demand for ethanol causing higher farm prices but clearly by their own admission 81% of the cost of food comes from beyond the farm. Given the great recession, labor costs have barely nudged but packaging and transportation costs are functions of energy costs. The average cost of crude oil in 2009 was $53.48 per barrel and as of April 5, 2011 the price for the U.S. benchmark crude oil is $108.14 per barrel, over two times as high. Clearly energy costs have doubled and their impact on packaging and transportation have been significant - just check the fuel surcharge rates instituted by freight haulers.<br />
<br />
And what about corporate profits? One vocal opponent of ethanol is Kraft Foods. Why, because it has removed the financial advantage from taxpayer-subsidized grain prices they enjoyed for decades. You see farmer innovation and genetic improvements allowed the supply of grain to rise much faster than demand for decades after World War II. To keep farmers planting and from going broke the USDA implemented its "loan" program which essentially guaranteed the farmer a minimum price sufficient to keep him barely in business. Because of the oversupply condition, this minimum price paid to the farmer was generally above the market price. Essentially this difference was paid by the American taxpayer with the benefit of low, subsidized, market prices going to the grain buyer, in this case a company like Kraft Foods. But don't worry too much for them, their gross profit margin last year, the difference between what they sold their products for and what it cost to produce them, was 34.8%. That is nearly double what the farmer received for his grain, not his profit margin as he has production costs too.<br />
<br />
So the next time you go to the store and experience sticker shock, think about the 81% that goes to companies beyond the farmer and the 34.8% gross profit margin. Big Oil and Big Food have a vested interest in deflecting consumer angst elsewhere and small ethanol is an easy target. Eliminating ethanol will have little impact on consumer food prices but replacing that ethanol with one million barrels per day of imported gasoline will make $108 per barrel look cheap. To say nothing of the havoc it will create for Rural America. The next time you hear about "food vs. fuel" remember "The Rest of the Story...."<br />
<br />
<br />
Ronald Houston Miller is Managing Director and co-founder of Prisma Advisors, LLC, a management advisory firm specializing in biofuels and biotechnology. Miller has four decades experience in the energy sector including being President and CEO of a Fortune 1000 producer of biofuels and food products from agricultural feedstocks.<br />
www.prismay-advisors-llc.com<div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-26475938241322426822011-03-17T19:00:00.001-07:002011-03-20T17:58:37.037-07:00THE PATH TO A CLEAN, RENEWABLE AND SUSTAINABLE FUTUREby Ronald H. Miller<br />
<br />
<br />
Twenty-five percent of our gasoline from renewable sources by 2022. Eighty percent of our electricity from renewable sources by 2036. Is this a trip to Fantasy Island or a challenge worthy of America's innovative prowess? Your answer probably depends whether you support "old" energy or "new" energy.<br />
<br />
In 2007, Congress and President Bush codified the Renewable Fuels Standard requiring 36 billion gallons of renewable fuels in our motor fuels by 2022. Now President Obama has laid down a gauntlet reminiscent of the 1960's moon race by calling for a near universal use of renewable power within twenty-five years. Whether America will achieve a clean, sustainable and independent energy future will depend on whether we as a nation can coalesce around this achievable goal. We have the innovative prowess but do we have the necessary commitment? That remains to be seen.<br />
<br />
Already some "old" energy pundits are suggesting we go slow. Five days after the State of the Union address, George Will was complaining about the EPA's decision to approve up to 15% ethanol in gasoline for 2001 and newer automobiles. Ironically it was the same day Chevron Corporation posted a 72% profit increase "on higher prices and improved refining margins". Now we have unrest in the Middle East that some are blaming on higher commodity prices, especially corn, due to ethanol production. It seems ludicrous that demand for less than 3% of the world's rapidly growing coarse grain production can create unrest on the streets of Cairo but some in the elite media would have you believe that is the case.<br />
<br />
The Wall Street Journal, no fan of ethanol, ran an article on January 31st entitled "Oil Prices Pose a Risk, Unrest Stirs Concerns That Risking Crude Costs Will Hamstring the Global Economy". The article noted that closing the Suez Canal would add 10 days delivery time from the Middle East to the U.S. which alone would push crude oil prices up even though we have emergency reserves. This, according to the article, would have a damaging effect on our economic recovery. Ten days and we're in trouble? That's pretty scary.<br />
<br />
It is time we end this cycle of uncertainty and dependence. How many embargoes, Gulf Wars, acts of terrorism and regime change will it take before we say enough? We are making some headway. According to the Energy Information Administration, U.S. dependence on imported liquid fuels as a percentage of total liquid fuel use dropped from a peak of 60% in 2005-6 to 52% in 2009 due in part to increased biofuel use. Today roughly 10% of our gasoline is biofuel, thirty years ago it was virtually zero. And it is still not enough. We need to set the new path forward now.<br />
<br />
Specifically we need to implement the following if we are to meet the goals laid down by President Obama:<br />
1.Eliminate all oil and gas subsidies now. 120 years is enough.<br />
2.Strengthen the Renewable Fuels Standard by imposing severe economic penalties on obligated parties who do meet the standard. Eliminate the option of reducing the standard in any given year based on available supply. Economic stress is the mother of invention and will move Exxon's production of algae biofuel from "someday" to "now".<br />
3.Apply the same policy direction and financial support for advanced biofuels that we supplied to the Manhattan Project and Space Race, without the red tape we have now.<br />
4.Apply the same effort to Renewable Electricity as we are to Renewable Fuels with market share benchmarks by year up to 2036 and the appropriate economic incentives and disincentives for obligated parties who achieve or fail to achieve the established benchmarks.<br />
<br />
Energy independence, clean energy, sustainable energy. These are all within our capability to achieve if we have the will. Now is the tipping point. Do you have the will?<br />
<br />
Ronald Houston Miller is Managing Director and co-founder of Prisma Advisors, LLC, a management advisory firm specializing in biofuels and biotechnology. Prior to forming Prisma, Miller was President and CEO of Aventine Renewable Energy Holdings, Inc., a Fortune 1000 producer of biofuels and food products from agricultural feedstocks.<br />
Prisma Advisors can be located on the web by visiting www.prisma-advisors-llc.com<div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-64590921096927319732011-03-17T18:59:00.001-07:002011-03-20T17:59:09.934-07:00LEST WE FORGET....by Ronald H. Miller<br />
<br />
<br />
The other day I was talking to a friend when I mentioned the Oil Embargoes of the 1970's. She was 7 years old in 1973 and has little remembrance of the long gas lines or the "odd" and "even" license plate days just to qualify getting into those long lines. It dawned on me that the post-Boomer generations have no real idea as to the trauma that is inflicted when our oil supply is shut off. As we watch the current events unfold in the Middle East, we must wonder whether possible regime change will take us back to those tumultuous days of four decades ago. Could it even be worse?<br />
<br />
From a dependency standpoint things are worse. In the 1970's we imported about 30% of our oil, today it is around 60%. Things would be even worse if it were not for 10% of the gasoline barrel now being provided by domestic biofuels. That's about one million barrels a day of secure domestic production not subject to regime change. It is also $100 million per day that stays in the U.S. economy instead of heading to the Middle East.<br />
<br />
As I was pondering this concern I was struck by two articles written by our friends at The Wall Street Journal. The first, written during the height of demonstrations in Cairo, suggested that a closure of the Suez Canal would add ten days steaming time on crude oil tankers destined for the U.S. thus causing a sharp spike in oil prices here due to supply disruption. Fortunately the Canal did not close but now we have armed Iranian warships cruising through the Suez inviting increased tensions in that volatile region. The second article noted that ExxonMobil is having a harder time finding oil and is only keeping its reserves up by growing its natural gas reserves through transactions such as buying XTO. Strategically that information is more worrisome than an Iranian destroyer on the loose.<br />
<br />
This year will be an interesting one on Capitol Hill as members of both parties juggle to deal with the economy, the deficit and politics in general. Some Members, mostly from southern and oil producing states, are attempting to reverse the gains in renewable fuel use made to date because of the rise in commodity prices. Yes prices are up. Since I entered the business, crude oil is up about five-fold and corn is up about three-fold. And yes, renewable ethanol has been a factor in both. About three percent of the global coarse grain supply goes to ethanol. Keep in mind that corn is made up of carbohydrate, protein and oil. Only the carbohydrate fraction goes to energy production. The protein and oil fractions remain in the food chain. A recent economic study noted that the use of ethanol impacted food prices between 0.5% and 0.8%. The reverse is true for ethanol's impact on gasoline. Ethanol keeps gasoline prices down and a sudden grab for one million barrels per day of high octane gasoline from overseas will make the Suez concern seem like child's play.<br />
<br />
One other interesting aspect shows up in the commodity price changes. Note that the relative increase in corn prices over the period is less than for oil even with the shift in demand from hydrocarbon energy to carbohydrate energy. Oil is very important to us but it is a finite resource and it is getting more costly and harder to find. It is not sustainable. Biofuels on the other hand are sustainable. In the case of corn, genetics continue to play a strong role in increasing yields and supply each year which is the primary reason the rise in corn prices have been quite moderate in real terms.<br />
<br />
Going back to 1973, the modern biofuels industry began because of oil supply disruption. America remains too dependent on foreign energy to stop progress in domestic renewable fuel use or roll back gains made to date. Under current law we will move the renewable content in motor fuel from 10% to 25% in next decade and all of that gain will come from advanced biofuels - biofuels that are environmentally "green" and not tied to food production. That is another one and half million barrels a day of foreign oil that won't be needed, or putting it another way, another $150 million per day, at today's prices, that stays in the good old USA instead of funding the War on Terror from the wrong side.<br />
<br />
Those who forget history are doomed to repeat it. We have a choice to put our faith in American ingenuity or an Iranian destroyer captain. If you lived through the embargoes you may want to think about that. If you were too young to drive, talk to your elders and learn from them.<br />
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Ronald Houston Miller is Managing Director and co-founder of Prisma Advisors, LLC, a management advisory firm specializing in biofuels and biotechnology. Prior to forming Prisma, Miller was President and CEO of Aventine Renewable Energy Holdings, Inc., a Fortune 1000 producer of biofuels and food products from agricultural feedstocks.<br />
<br />
Prisma Advisors can be located on the web by visiting www.prisma-advisors-llc.com<div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-2069317321200880152011-03-17T18:58:00.001-07:002011-03-20T17:59:41.078-07:00WHEN CHANGE BECOMES A THREATBy Ron Miller<br />
<br />
<br />
On January 3rd, the National Petrochemical and Refiners Association sued USEPA over its ruling to allow 15% ethanol in gasoline for later model automobiles. This is not a surprise as the battle for market share and the consumer's wallet goes on. What began as a nice idea to blunt the oil embargoes of the 1970's is now a real and present danger to fossil fuel interests. This latest action and counteraction are merely steps in this ongoing war over who is going to control the energy mix in America.<br />
<br />
The current round began with the Energy Security Act of 2007. That law requires by 2022 that 36 billion gallons of renewable fuels be used in U.S. motor fuel each year. That's roughly 25% of the gasoline sold in America. This constitutes a serious loss of market share for fossil fuel interests. The genesis of this act and the public policy before is a legitimate concern for our energy security interests. Since 1990 all of America's wars have been fought in the oil rich Middle East. Without American oil revenues our enemies, especially Al-Qaeda, would not have the means to attack us or disrupt global peace. Former CIA Director James Woolsey said it best when he stated, "The Global War on Terror is the second war in history where the U.S. has funded both sides - the first being the Civil War." Importing 60% of our oil needs means we will continue to fund both sides for some time.<br />
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EPA's ruling is not without fault. It applies only to 2007 and newer automobiles. They will consider 15% blends for 2001-2006 models this year and older models sometime after that. This trifurcation of the marketplace makes the current ruling a moot point for now. It's not likely consumers will see an E10 unleaded for older cars and an E15 premium unleaded for newer cars at the gas pump any time soon. One needs only to look at the slow rollout of E85 for flexible-fueled vehicles to understand how difficult it is to bring a new, separate fuel to the pump island in this country especially when that pump island is owned by a fossil fuel producer. So why is NPRA fighting? Because EPA will eventually approve E15 in all vehicles and another 5% share will be lost. Because of strong fossil fuel interests this has become a battle of attrition. After 30 years America is now using E10 in conventional vehicles and E85 in flexible-fueled vehicles. By contrast Brazil, with a much more acute fossil fuel supply problem, switched decades ago to E25 in conventional vehicles and E100 in flexible-fueled vehicles. Now Brazil consumes more home grown ethanol than petroleum in their motor fuel.<br />
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Much is being made about corn-based ethanol. Food vs. fuel, etc., etc. For fossil fuel interests, that threat has come and gone. Under current law the standard for corn ethanol is capped at 15 billion gallons per year. Today we make about 14 billion gallons annually so with a couple of new plants and expansions we are essentially done. The new threat comes from advanced biofuels: cellulose, algae, switch grass, municipal waste, trees, etc. That threat is a staggering 21 billion gallons per year or 1.4 times larger than the corn ethanol market. Exxon in their TV ads talks about producing new biofuels from algae "someday". Because of the foundation laid by the current ethanol industry, that "someday" will be much sooner than fossil fuel interests would like. And don't count corn ethanol out either. With gene technology rapidly growing corn yields per acre and advanced production methods reducing cost and carbon footprint, this sector will continue to constitute a competitive threat for fossil fuels.<br />
<br />
So the next time you hear about the ethanol debate remember that it is really all about market share and the consumer's buck. Who will get it, Middle America or the Middle East? You decide, if you get the chance.<br />
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<br />
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Ronald Houston Miller is Managing Director and co-founder of Prisma Advisors, LLC, a management advisory firm specializing in biofuels and biotechnology. Prior to forming Prisma, Miller was President and CEO of Aventine Renewable Energy Holdings, Inc., a Fortune 1000 producer of biofuels and food products from agricultural feedstocks.<br />
<br />
Prisma Advisors can be located on the web by visiting www.prisma-advisors-llc.com<div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-66305352858397024172011-03-17T18:49:00.001-07:002011-03-20T18:00:02.692-07:00Staying the Course<div align="CENTER" style="margin-bottom: 0in;">Article 1</div><div align="CENTER" style="margin-bottom: 0in;">(First in a series of articles on the U.S. ethanol industry.)</div><div align="CENTER" style="margin-bottom: 0in;">By Ronald H. Miller</div><div align="CENTER" style="margin-bottom: 0in;"><br />
</div><div align="CENTER" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;">Recently the Wall Street Journal ran an editorial titled "Al Gore's Ethanol Epiphany" where they state "he concedes the industry he promoted serves no useful service". The editorial itself is hardly an epiphany given the Journal's long history of anti-ethanol bias, preferring to support established big money advertisers in Big Oil and Big Food. Mr. Gore's "epiphany" is hardly that given he has moved on to "greener" pastures (pardon the pun) and needs to reinvent himself with interested financiers such as the gathering in Greece where he made those comments. The scene is reminiscent of 1992 when I met Senator Gore during his Vice Presidential campaign in Illinois. That was another period of economic stress especially in the rural Midwest. During our meeting, the future Vice President said directly to me that "We need a strong ethanol industry to create a strong farm economy to restore jobs and that is why Bill Clinton and I need to be in Washington to get this economy moving again." That is exactly what has happened in the intervening 18 years and now the Wall Street Journal is lamenting the "transfer of wealth to the farm states". My question is transfer from whom?</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;">I am a second generation Big Oil man whose father went to work for Texaco in the oil fields of southern Oklahoma in 1945 after spending two and a half years in overseas combat zones with U.S. Army Air Forces in what was supposed to be the last global war against evil. I joined Texaco in 1971 right out of college and settled into a quiet lifestyle providing one of the two necessary commodities, energy and food, needed in a modern world. The quiet life was shattered two years later when America got on the wrong side of Middle Eastern oil politics and paid a steep economic price during the country's first Energy Crisis. Texaco had invested deeply into the Arabian American Oil Company (Aramco) and paid an even steeper price with less crude oil supply than practically any other competitor. After the crisis we made an effort to shore up our Aramco relationship, now nationalized by the Saudis, while exploring alternative fossil fuel production such as coal reserves (still undeveloped) in Wyoming. In fact, I was interviewing for a possible one-to-two year stint in the Saudi kingdom when Energy Crisis II erupted in 1979. This time Texaco turned to the benefits of renewable ethanol as both a secure domestic energy source and as a clean, high octane replacement for lead in gasoline. Thus began my life in the ethanol industry. As a member of Texaco's Midwestern Region Operations group, we made the initial conversion from leaded premium gasoline to Lead Free Premium Gasohol a 90 octane unleaded fuel designed for premium performance automobiles. Later I assumed responsibility for purchasing Texaco's ethanol and in 1981 I was selected to become Director of Marketing for Texaco's new ethanol joint venture with CPC International known as Pekin Energy Company.</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;">I describe this background as I am about to embark on a series of articles on the U.S. ethanol industry told from the perspective of an industry insider who has been there from the beginning. For over thirty years, I have seen firsthand the impact of ethanol on Main Street and believe it or not, on Wall Street. These articles may never appear in the Wall Street Journal and that is fine. It is Main Street America that is the heart and soul of this effort to create American jobs and deny funding the enemy in our latest global war against evil. I doubt the elite Eastern media will get it but I can guarantee you the 400,000 workers with good paying jobs due to the ethanol industry and the millions of farmers who have a sustainable marketplace because of ethanol get it. So do the Midwestern communities benefiting from the economic impact of ethanol. Middle Eastern communities probably do not.</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;">The foundation of the ethanol industry is built on a three legged stool of Economic Security, Energy Security and Environmental Protection. In the coming weeks we will explore issues affecting this segment of the energy and food complex in America. Food? Yes, despite food vs. fuel claims, this industry provides high quality food and feed ingredients. We will discuss that aspect as well. Today's ethanol industry is the foundation for tomorrow's diversified, sustainable energy platform. That is ethanol's success. That is also ethanol's curse. It has become meaningful in a marketplace dominated for a 150 years by fossil fuels. We are no longer an annoying fly buzzing around the room. Ethanol is now close to 10% of the gasoline sold in the U.S. That's a big deal if you are a competitor. It's even a bigger deal that the Federal Government in 2007 set this country on a path of replacing 36 billion gallons of fossil fuels, about 25% of our gasoline supply, with renewable fuels by 2022 under the Renewable Fuels Standard. That represents a significant transfer of wealth, but again from whom?</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;">That transfer is certainly not from the taxpayer. In 2009, domestic ethanol production returned $8.4 billion to federal tax coffers or $3.4 billion more than the cost of the tax incentive. In addition some $7 billion in much needed tax revenues were directed to state and local governments hard pressed by the poor economy. Finally ethanol related jobs provided more than $16 billion in increased household income. Currently ethanol is displacing some 364 million barrels of imported oil per year keeping $21 billion in the U.S economy versus sending it overseas. Sure some of this $21 billion goes to the Midwestern farm states but not one dime goes to Middle Eastern oil states. That is a transfer of wealth we can all be proud of. The stakes are high and so is the rhetoric. That is the price of success.</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;">Going back to Mr. Gore's epiphany in front of a group of clean energy investors in Greece. Disavowing one renewable energy for the sake of another is a death trap. Remember the quote, "we shall all hang together, for surely we will hang separately." Ethanol is the foundation for a diversified, sustainable energy economy. Don't get me wrong. I am not anti-oil. We live in a fossil fuel economy and will continue to do so for at least the rest of my life time. However it is not sustainable over the long term. We need balance in our energy, economic and environmental mix. Despite the Journal's assertion to the contrary, ethanol serves a purpose to bring balance to that three legged stool. In the coming weeks and months we will discuss that purpose in more detail.</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;"><br />
</div><div align="JUSTIFY" style="margin-bottom: 0in;"><i>Ronald Houston Miller is Managing Director of Prisma Advisors, LLC, a management advisory firm specializing in the alternative fuels and biotechnology sectors. Prior to forming Prisma, Ron was President and CEO of Aventine Renewable Energy Holdings, Inc. a Fortune 1000 producer of biofuels and food products from agricultural feedstocks that he helped start. He was also the longest serving Chairman of the Renewable Fuels Association, the industry trade association for the domestic ethanol industry.<br />
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Prisma Advisors can be located on the web by visiting www.prisma-advisors-llc.com</i></div><div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7359363449129336896.post-8229124448297473112011-03-07T17:51:00.001-08:002011-03-07T17:51:48.959-08:00FORMER AVENTINE CEO, BUSINESS RESOURCES EXEC FORM BIOFUEL CONSULTANCY<span class="Apple-style-span" style="color: #323229; font-family: 'Lucida Grande', 'Lucida Sans Unicode', sans-serif; font-size: 13px; line-height: 16px;"><span style="border-collapse: collapse; color: black; font-family: arial, sans-serif;"><span style="font-size: small;">2011-02-22 11:42:17 EST<br />
FORMER AVENTINE CEO, BUSINESS RESOURCES EXEC FORM BIOFUEL CONSULTANCY<br />
</span></span></span><br />
<div><span style="border-collapse: collapse; color: black;"><span style="font-family: 'times new roman', serif; font-size: small;">Phoenix -- Former Aventine CEO Ron Miller teamed up with another former<br />
Aventine official to form a biofuel-related consultancy that has been<br />
operational since last spring, OPIS learned on the sidelines of the<br />
Renewable Fuels Association's (RFA) annual conference here.</span></span></div><div><span style="border-collapse: collapse; color: black;"><span style="font-family: 'times new roman', serif; font-size: small;"><br />
Miller and Roger Bushue, former Aventine vice president for Business<br />
Resources and Administration, formed Prisma Advisors to help provide<br />
guidance primarily to start-up biofuel companies, Miller explained to OPIS at the<br />
conference on Monday. Miller retired from Aventine in October 2009, six<br />
months after the ethanol producer filed for bankruptcy protection. Aventine has<br />
since emerged out of bankruptcy.</span></span></div><div><span style="border-collapse: collapse; color: black;"><span style="font-family: 'times new roman', serif;"><br />
</span></span></div><div><span style="border-collapse: collapse; color: black;"><span style="font-family: 'times new roman', serif;"><br />
<span style="font-size: small;">"We are helping these companies try to get financing ... set up personnel<br />
and providing guidance and counseling," Miller explained, noting that his<br />
company has approximately half a dozen clients using various fuels such as<br />
cellulosic biofuel and butanol, in various stages of development. Among the<br />
company's current clients is Agresti, a waste-to-ethanol company planning a<br />
facility in Kentucky.</span></span></span></div><div><span style="border-collapse: collapse; color: black;"><span style="font-family: 'times new roman', serif; font-size: small;"><br />
Prisma Advisors has another four to five clients "that are really in the<br />
early stages of development," Miller noted. The clients tend to be for<br />
domestic-based biofuel projects, he added.</span></span></div><div><span style="border-collapse: collapse; color: black;"><span style="font-family: 'times new roman', serif; font-size: small;"><br />
Earlier at the conference, RFA presented Miller with its 2011 Membership<br />
Award, recognizing him as one of the group's founders.</span></span></div><div><span style="border-collapse: collapse; color: black; font-family: arial, sans-serif;"><br />
--Rachel Gantz, <a href="mailto:rgantz@opisnet.com" style="color: #1c51a8; text-decoration: underline;">rgantz@opisnet.com</a><br />
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Copyright, Oil Price Information Service</span></div><div class="blogger-post-footer">Prisma Advisors, LLC is a premier management and advisory firm that specializes in working with startup companies in the alternative energy and biotechnology sectors.
www.prisma-advisors-llc.com</div>Unknownnoreply@blogger.com0