Here's Why Corn Cost Less per BTU
- Say thanks for the corn stove. Natural gas per BTU will always cost
near ten times the cost of corn. Corn prices are influenced by the
cost of nitrogen fertilizer which is made from natural gas. Notice
below that corn cost about one tenth the cost of natural gas per BTU.
I purchase corn at wholesale price on the farm. I may shop for
prices but can never purchase natural gas at wholesale price.
Nitrogen fertilizer situation and outlook
May 21, 2007 9:25 AM, By Rob Hogan
University of Arkansas Extension Economist
Of utmost concern to many producers in Arkansas and the rest of the
U.S. is the dramatic rise in nitrogen fertilizer prices, particularly
urea. Over recent months, a dramatic 50 percent increase in per ton
urea prices has occurred.
As of early September 2006, the average per ton price of urea in
eastern Arkansas was $260. Today, urea prices ranging from $420 to
$440 per ton are very common.
Uncertainty exists whether prices will trend higher or stabilize.
There are a few key factors currently influencing urea prices. Some
of these may have lingering and long-term effects.
2007 acreage shifts: Overall demand for nitrogen fertilizer in the
United States has been stable over the past 10 years. Substantial
price increases over the past year for corn and wheat will increase
demand for nitrogen significantly.
September 2007 corn futures have surged 26 percent since mid-
September due to reduced inventories and increased ethanol demand.
With corn prices at 10-year highs 60 days ago, U.S acreage for the
crop may increase as much as 15 percent in 2007.
Furthermore, U.S. winter wheat acreage is up 3.5 million acres over
the previous year, also due to decade high prices.
Unfortunately, this surge in nitrogen demand is occurring at a time
when domestic nitrogen production is in decline.
U.S. nitrogen production: U.S. production of anhydrous ammonia, the
feedstock for production of other nitrogen materials, has decreased
significantly in recent years.
The International Fertilizer Development Center reported in 1999 that
U.S. ammonia capacity was about 20.1 million tons and urea capacity
about 10.3 million tons. By 2005, ammonia and urea capacity had each
declined 25 percent to 15 million tons and 7.7 million tons
The loss of domestic production can be largely attributed to the
significant rise in the cost of natural gas. Natural gas costs
account for the majority of anhydrous ammonia production costs.
During the late 1990s, the cost of natural gas to ammonia producers
reached approximately $2 to $2.25 per million Btu, accounting for
about 80 percent of total production costs. By 2004 domestic ammonia
producers faced gas costs of $5.26 per million Btu, representing
nearly 90 percent of total production costs.
By the late 1990s, producers began idling and closing facilities
because of increased costs of natural gas.
After a further surge in natural gas prices in recent years, U.S.
nitrogen producers find it increasingly hard to compete with foreign
countries where natural gas can be obtained at lower prices. The
General Accounting Office documented in 2003 that while natural gas
prices averaged $5 per million Btu in the United States, the price
was 60 cents per million Btu in the Middle East, 40 cents in North
Africa, 70 cents in Russia, and 50 cents in Venezuela.
Nitrogen imports accounted for nearly 50 percent of domestic supply
for the 2005 fertilizer year (beginning July 1) and 85 percent of
nitrogen fertilizer use. By comparison, nitrogen imports only
accounted for 20 to 25 percent of total nitrogen supplies during the
During 2005, the United States imported urea from 33 foreign
countries. Two-thirds of total imports were from Canada and six
Middle Eastern countries.
Global price competition: Information from ag input suppliers and the
U.S. International Trade Commission reveals that nitrogen imports are
running below average levels for this time of year. Urea import
volumes are below last year's total import levels by 483,000 tons.
As in the United States, grain acreage will expand around the world.
Price competition from various countries, particularly those in Latin
America, has resulted in cargos of urea being diverted to locations
other than the U.S. gulf coast.
2007 outlook: High energy prices and increased grain acreage will
continue to be major factors supporting fertilizer prices. World
economic growth, particularly in Asia, is expected to continue and
along with it energy demand should rise. Natural gas prices have
increased about 15 percent since early January, and futures contracts
indicate that prices will remain between $7.70 and $9.40 per million
Btu from 2007 to 2010. Thus, natural gas will continue to be a major
influence upon and significant component of nitrogen production costs.
The latest estimates from the U.S. Department of Energy indicate that
crude oil prices will hover near $64 per barrel over the course of
2007. Crude prices at this level will encourage the continued
expansion of biofuel production. U.S. ethanol production could
consume nearly 30 percent of total corn production in 2007.
With declining inventories of corn and higher crop prices, nitrogen
demand will undoubtedly surge in the United States and around the
world in 2007. At least for the foreseeable future, nitrogen demand
growth is exceeding supply and will continue to underpin prices.
--- In email@example.com, "yellowcorvette4"
> That Georgia Power electrical fire has spread to Florida causing
> $20 million in damage.stop
> --- In firstname.lastname@example.org, "Cornstoves" <haclift@> wrote:
> > Corn is safe and cost effective energy.
> > Hidden cost of alternative energy should be acknowledged.
> > Autos, electric autos, and electricity are hazardous.
> > At Georgia Power an electrical accident has killed and injured
> > several people this week, destroyed dozens of homes, burned
> > of acres of vegetation, and polluted the atmosphere with solid
> > particulate, CO, CO2. The fire continues. No human effort can
> > the raging damage. A rain is the only known method to curtainutility
> > damage.
> > Fortunately insurance will cover the damages. Unfortunately,
> > with an insurance policy will help pay for the damage. The
> > bill and taxes will also cover the damage. The hidden cost ofevents.
> > electrical energy is seldom acknowledged or mentioned. Some say
> > is no choice.
> > Corn is clean, cost effective and safe.
> > Electricity is costly and convenient.
> > --- In email@example.com, "Cornstoves" <haclift@> wrote:
> > >
> > > Removal of question mark raises question about global warming.
> > > Politicians proceed to teach facts to Harvard Students based on
> > > questions raised by professionals. Both conveniently fail to
> > mention
> > > one fact: Water vapor and distribution of global moisture exert
> > more
> > > atmospheric influence than any single or combination of
> > > Humans have no control over global relative humidity.or
> > www.nasa.gov,
> > > google: global water vapor atmospheric influence Scientist do
> > agree
> > > that global change may include global warming, global cooling,
> > > combinations of both. No scientific expert is personallyof
> > > knowledgeable or publically acknowledges the potential savings
> > > corn stoves for heat energy.circulation
> > >
> > >
> > > Uncertainty over weakening circulation
> > > March 2007, page 14
> > >
> > > Barbara Goss Levi's Search and Discovery story (PHYSICS TODAY,
> > April
> > > 2006, page 26) discusses evidence of weakening ocean
> > andincludes
> > > its possible connection to global warming. The Atlantic Ocean
> > > circulation across 25° N latitude has been used as a benchmark
> > > characterizing the mass and heat transport from the tropics to
> > > northern latitudes. The upper portion of this transport
> > thethe
> > > Gulf Stream, which is at least partially responsible for a
> > > climate in Europe. A weakening of the Atlantic meridional
> > overturning
> > > circulation and of the Gulf Stream might have the unpleasant
> > > consequence of cooling Europe's climate.
> > >
> > > The PHYSICS TODAY piece is based on analysis of work by Harry
> > Bryden,
> > > Hannah Longworth, and Stuart Cunningham,1 which concluded that
> > > Atlantic meridional overturning circulation slowed by about 30%
> > > between 1957 and 2004. Their work inspired speculations that
> > > anthropogenic increase in carbon dioxide may be responsible forlayer
> > > weakening of heat transport from the tropics, and that such an
> > effect
> > > has now been detected.
> > >
> > > The conclusion that the Atlantic meridional overturning
> > > has decreased by 30% does not follow from the data presented by
> > > Bryden and coauthors, but is based on an incorrect treatment of
> > > measurement errors.
> > >
> > > According to Bryden and coauthors, the 1957 transport in a
> > > shallower than 1000 m was 22.9 ± 6 Sverdrups (1 Sv = 106 m3/s)6
> > > compared with the transport of 14.8 ± 6 Sv in 2004. The ± 6 Sv
> > > represents an uncorrelated error of each measurement. Bryden
> > > subtracts the two quantities and presents the results as 8.1 ±
> > > (instead of 8.1 ± 12 Sv or ± 8.5 Sv, depending on the character
> > > errors), which is an incorrect result. It is a mystery how such
> > > error was missed by Levi and by the editors and reviewers of
> > > original paper. The observed change of 8.1 Sv is well withinthe
> > > uncertainty of the measurement. The correct conclusion from thecirculation
> > data
> > > presented in Bryden's paper should have been that no
> > > significant change in Atlantic meridional overturning
> > atconclusion
> > > 25° N between 1957 and 2004 has been detected. Such a
> > > in agreement with the earlier analysis of essentially the same
> > > (between 1957 and 1999) by Alexandre Ganachaud and Carl
> > >Nature
> > > Research also failed to detect any slowing,3,4 and one of the
> > > relevant papers4 concludes that "there is no sign of any
> > > Overturning Circulation slowdown trend over the past decade,
> > contrary
> > > to some recent suggestions."1
> > >
> > > In defense of Bryden and his coauthors, I must share a comment
> > a
> > > personal communication I had with Bryden shortly after his
> > > paper was published. Bryden's paper as submitted forpublication
> > > Nature included a question mark at the end of the title,
> > > only a possibility that the circulation might be slowing down.
> > thetitle
> > > editor's insistence, the question mark was removed, and the
> > wasstir.
> > > changed into a positive statement that caused a considerable
> > >
> > > References
> > > 1. H. L. Bryden, H. R. Longworth, S. A. Cunningham, Nature 438,
> > > (2005) [MEDLINE].
> > > 2. A. Ganachaud, C. Wunsch, Nature 408, 453 (2000) [MEDLINE].
> > > 3. C. S. Meinen, M. O. Baringer, S. L. Garzoli, Geophys. Res.
> > > 33, L17610 (2006) [SPIN].
> > > 4. F. A. Schott, J. Fischer, M. Dengler, R. Zantopp, Geophys.
> > > Lett. 33, L21S07 (2006) [SPIN].
> > > Petr Chylek
> > > (chylek@)
> > > Los Alamos National Laboratory
> > > Los Alamos, New Mexico
> > >