Haha. The fun never stops…

Sugar: Prices soar as Brazil’s flexfuel cars set the pace [Financial Times]

A mixture of free-trade politics, speculative flows of “hot” money and environmental concerns have also helped make sugar the best performing commodity this year.

(…) for once China does not appear to be the central driver of a dramatic reversal in the fortunes of a commodity market.

Instead it has been Brazil’s thirst for ethanol, derived from sugar cane, to power “flexfuel” cars that also run on petrol that has pushed sugar to a 25-year high.

One more commodity used to fuel our cars’ limitless needs is running out…

About half of Brazil’s sugar cane crop is used for domestic ethanol production, with flexfuel cars accounting for almost 50 per cent of domestic new car sales. They also represent a budding export industry, with the US, Sweden and Britain already selling the environment-friendly cars.

In the past 12 months sugar has come to be seen as an energy crop because of the growth in demand for ethanol, says Sergey Gudoshnikov, senior economist at the International Sugar Organisation, which represents most of the world’s producers.

So demand is skyrocketing, because of our need for energy, and oil-substitutes. An indirect sign of peak oil, if that was ever needed. And it’s happening really, really quickly…

Czarnikow predicts a raw sugar trade deficit of more than 4m tonnes, the largest shortfall in six years. The ISO estimates that sugar inventories are about 35 per cent of global production, down from 50 per cent in the late 1990s.

However, other analysts reckon stockpiles are a lot lower, making the sugar market even more vulnerable to shocks such as Cyclone Larry, which this month wiped out about 10 per cent of Australia’s raw sugar output.

(…) “The challenge to find increased sugar output is becoming more difficult,” says Mr Gudoshnikov, who expects annual sugar demand to continue rising at an average of 2 per cent.

“That means finding 3m tonnes or more of new sugar production each year, whereas 30 years ago a 2 per cent increase meant a couple of hundred tonnes.”

So, production is already lagging behind demand, and the market is getting very tight, making it vulnerable to external shocks like hurricanes (heh, in Australia this time). Isn’t it strange that this is happening at the very moment these external shocks seem to become more frequent?

It is really starting to look like we are getting to the end of a lot of things at the same time, as we switch from the most depleted to others, making the depletion of these catch up extra quickly. Of course, sugar itself cannot be “depleted”, but the land used to grow it can, or can reach very real limits. The article suggests that Brazil’s production is stagnating despite increased land use, due to unfavorable weather impact (in that case, droughts, but these seem to happen all too frequently, and what will it be the other years?)

And, very similarly to the distorted energy markets, the sugar market is not really a market:

Sugar lobby still packs a punch despite reform [Financial Times]

Global trade in sugar is one of the most distorted of all commodity markets, thanks to sugar lobbies that frequently punch well above their weight when demanding subsidies and tariff protection.

The world sugar market has often been called a “dump market” by many sugar growers. Prices are depressed by cheap sugar from efficient producers like Brazil and Thailand that are kept out of rich countries’ markets, and by those rich countries, particularly the European Union, that dump subsidised sugar that exceeds their own needs.

Prices lower than they should be thanks to subsidies… lobbies that are very effective at keeping access to public funding or public “protection”… distorted incentives for all. Where have we seen this before?

When will we learn?

EB ed: From a follow-up posting March 31 by Jerome a Paris Daily Kos (Peak Sugar – Entropy Will Not Be Mocked:

I was going to crosspost my diary on Peak Sugar from European Tribune as such, but it got such brilliant comments that I am going to focus on these instead.

The trigger for that diary was an article about the record sugar prices, triggered by the perception that sugar can be used to produce ethanol and thus to fuel cars.

Looming peak oil spreading to other resources as we scramble to maintain our addiction…

A quick summary of my diary is thus:

[recapitulates earlier article]

DeAnander, one of my favorite commenters on European Tribune then came up with this, which is worth reporting almost in its entirety, with full credits to her:

Let’s understand something very basic here:  Entropy is Not Mocked.

It takes a certain number of calories H (heat) to make a certain number of calories’ worth E of ethanol, out of a certain number of calories R (raw) cane or corn or any other sugar-rich source material.  We know that E will always be less than H+R.

In severe cases, E may even be less than H!  [I don’t know that this is the case for the operations in question since the article slithers past this point, but it is the case for petro-intensive farming in general.] Supposing for a moment that we do get less energy out in the ethanol form than we burned in the coal form, then it would have been more efficient just to burn the coal in the cars.  (This might have more negative implications for particulate emissions control, but I am talking only about energy math here).

We will also get less calories out in ethanol per unit feedstock than we put in (in raw feedstock form), because some of the feedstock will be waste;  but the output product will be denser.

(…) This game is all about energy density, and the only way to achieve high energy density is time plus pressure (and usually heat).  What coal and petroleum really are, is biotic feedstock plus aeons of time plus aeons of pressure, producing a high energy density which we then make even higher by refining processes which require more heat/pressure cleverly applied.  

So what we are trying to to is to compress time (i.e. energy) in the same way we do with a spring trap or crossbow;  we spend N minutes winding the thing up and then all that invested energy is released in N/X minutes where X is a very big number.  [A a lever or winch works the other way around, extending the time needed to move the weight and thus reducing the calories expended per second — time expansion, lower energy density aka lower burn rate.]

The private auto, the jet aircraft, and the planing heavy vessel are the ultimate worst case for fuelling, because they require high energy density (high burn rate), which is the costliest thing to achieve in a fuel.  They work only by releasing very large amounts of energy very quickly and keeping up this high burn rate for extended periods.  Thus they require the most grotesque conversion factors from raw (feedstock) calories in to calories out.    [and the reason they do this is not only because of the physical inefficiencies of internal combustion and excessive carcass weight, but because we insist on using them for extreme time compression, i.e. extremely high speeds.]

We have traditionally got this staggering conversion factor by looting geological/evolutionary time, i.e. spending, in a scant century or two, the fossil wealth “wound up” out of biotic processes plus sunlight (heat) plus pressure plus geothermal heat plus aeons of time.

If we now try to produce this same energy density or burn rate using immediate biotic sources, we run into a little problem — a time travel problem as it were:  a normal growing season doesn’t deposit that much energy in a vegetable crop.  Our desired burn rate is grotesquely disproportionate to the growth rate of biotic sources, whether vegetable or animal — you couldn’t drive around carrying the amount of raw feedstock needed to produce the calories to keep the vehicle moving.  So we have to invest a lot of heat/pressure (i.e. energy) to provide even a feeble approximation of the time compression we want.  In other words, burn a lot of coal (or something else fairly dense) to make ethanol;  and burn a lot of fossil fuel in artificial soil enrichments and fossil-powered factory farm equipment to force a higher-than-natural yield rate, to wrench as many calories per acre as we can from depleted soil.  (Again trying to optimise density, not overall EROEI).

Heinberg once wrote in a whimsical “letter from the future” (in which he affected to look back from a life after the oil peak, and write to his real contemporaries today, me and you):

At first, most people thought the shortages could be solved with “technology.” However, in retrospect that’s quite ludicrous. After all, their modern gadgetry had been invented to use a temporary abundance of energy. It didn’t produce energy.  […]  With the exhaustion of fossil fuels, no technology could have maintained the way of life that people had gotten used to. But it took quite a while for many to realize that. Their pathetic faith in technology turned out to be almost religious in character, as though their gadgets were votive objects connecting them with an invisible but omnipotent god capable of overturning the laws of thermodynamics.  [boldface mine]

And here’s the rub.  We don’t produce energy. (Nor can we “produce” time.)   There are only three processes that produce energy:  sunlight striking the surface of the planet, the thermal activity of the molten core, and the instability of certain isotopes found in the crust [and many an astrophysicist would scoff at this and say that these things no more produce energy than a Duracell battery — they merely release, over time, the tremendous initial energy of the Big Bang, the original Wound Up Spring].

What we do is harvest or concentrate energy — what all life processes do, in fact.

We (humans) have a persistent and aggravated history of overharvesting stored energy, that is, consuming biotic energy resources at a rate that exceeds their regeneration or replacement rate — whether this be for immediate alimentary needs or for more sophisticated applications like cooking, heating, clothing, etc.  We have a history of looting the stored biotic wealth of topsoil, for example (formed by millennia of forestation) in an extractive mode so as to reap exaggerated harvests from it for a limited time — depleting it so severely that after the boom period is over, our return on labour invested diminishes rapidly and we have to fall back through a (usually pretty quick) series of devolving crops and practises.   This fallback and devolution is touched on by Jerome in the article;  a frantic spiral downwards from one to another apparently cheaper (slower, less dense) substitute until either equilibrium is restored, or desertification and die-off or migration result.

One end product of this kind of liquidation in an agrarian culture is an arid scrubby biome, xericultivated, with frugal animals like sheep and goats and chickens/rabbits being farmed, and mules or donkeys used for transport, rather than extravagant animals like beef cattle and heavy horses.  With concomitant changes in diet and social organisation a stable human population can live rewarding lives even in such a degraded biome.

The fossil fuel boom is (my view concurring with a school of historical/political thought here) just another one of these stories of looting, in a compressed time period, the accumulated energy discovered “free for the taking”.  Whether it be topsoil or petroleum, the initial high burn rate cannot be sustained, and attempts to sustain it hit the walls of thermodynamics very quickly.  This is the final refutation of the infamous doctrine of substitutability:  we can’t eat rocks and sand.

Nor, imho, can we sustain an insanely profligate burn rate as required by our present models of transport, housing, commerce, and agriculture by any sustainable substitutions for fossil fuels.  The burn rate itself is inherently unsustainable. This is at present a minority viewpoint, but it is mine until I see some compelling evidence to the contrary.  We should have been called, not homo habilis (clever though we are), nor homo sapiens, nor even homo economicus (“oikonomikos” is in its original usage the management of the finances of a household, and liquidation is piss-poor blind-drunk management);  perhaps we should have been called homo spendthriftus, the species with the high burn rate.