The Oil Drum did a great analysis of the economics of ethanol derived from corn as the feedstock yesterday. Read the article, it’s very well done. I’ll steal the punch line, on average at present ethanol prices (production and sale) there is a 7% margin on the product. That’s right, 7%. It’s awfully tough to make a living on 7% unless you’re moving massive volumes.

Does this mean ethanol is dead? No, not at all for a few reasons. First, the prices for ethanol sale move as do the corn feedstock prices. At $5/bushel of corn, that means the feedstock price for ethanol is $1.30/gallon (net of the $0.55/gal recovery from the resale of distillation byproducts.) In a certain sense, corn ethanol’s challenges today are a direct result of its early success – the more demand there is for the feedstock, the higher the price goes, corn has doubled in price the past couple of years.

Second, even with the current tough economics, the money spent in the production and consumption of ethanol is staying in the US vs. being shipped to OPEC countries, this is a net positive and it seems likely that government regulations will favor domestic ethanol production in upcoming energy policy decisions.

Finally, technology associated with alternate feedstocks, (i.e., cellulosic ethanol) is advancing at a pretty fast clip. When the science is able to be applied at scale against a feedstock like switchgrass where there is no competing food demand, the feedstock price should go down dramatically and perform more predictably (although there will be a premium paid in higher capital costs to build these plants it appears.)

It’s clear given the situation in Brazil that ethanol economics can work at scale, but the right approach must be employed. The biofuel market may be in a trough, but it’s likely a temporary situation.

Earlier this week, Calpine emerged from bankruptcy protection after a prolonged struggle that saw multiple delays. The issue is now trading on the NYSE under symbol CPN-WI. The new issue will have 423 million shares outstanding meaning the market capitalization of the company at today’s values is nearly $7B. We’ve been a bit skeptical that Calpine could emerge, but have been proved wrong as they are now back in business and moving forward.

Let’s hope that the generator can stay in business and invests in the geothermal portion of its portfolio, after all, there are no ongoing fuel costs!

These were all the rage in 2005/6 and we really haven’t seen them emerge. The promise of such technology is amazing, but alas, there hasn’t been much follow through in terms of real market applications. There were also printable displays with electronic ink that seemed to be emerging, but somehow stalled. In any case, watch the video above, it’s certainly interesting.

After our endorsement of McCain and Obama yesterday, both candidates went on to enjoy significant success during the Super Tuesday primaries and caucuses. You heard it here first, those two candidates will be squaring off in November for the top prize. McCain will be uncomfortable with running mate Mike Huckabee and John Edwards will round out the ticket for the Democrats.

So candidates, don’t overlook Musings from the Coast, it’s clear our readers hold great sway in the elections!

(This is totally tongue in cheek in case the humor font is not working…)

Today is “Super Tuesday” and since our home state, California is voting today, I thought I’d roll out my endorsement for candidates on each side. Once the candidates have been selected from each party, I’ll make a selection and endorsement for a President. For now though, since we’re going to be stuck with mainstream candidates, the endorsement is based on that ambiguous notion of leadership.

When I say leadership, I have a very specific view of what it is: A person’s ability to create an attractive and achievable outcome, the ability to compel people to want to participate in achieving the outcome, and the ability to select the right people to link the vision and willing resources to execution of specific programs and projects that ensure the outcome is achieved. Here’s a handy reference on the difference between leadership and management, one leads people and one manages things.

On the Republican side, John McCain has demonstrated leadership throughout his career in public service. He has shown the ability to exercise good judgment and grow from the instances when he did not put that judgment to good use. He is clearly an experienced leader and represents the best of set of characteristics to lead this country from the Republican slate. Senator McCain has my endorsement as the Republican nominee.

On the Democratic side, Barack Obama has energized a large segment of the population and for many, provided hope for the first time in nearly a decade. His ability to communicate, motivate, and catalyze is distinct in this race for the nomination. While not as experienced as some of his competitors, he possesses leadership and judgment envied by all candidates. Senator Obama has my endorsement as the Democratic nominee.

Of special note, while not earning an endorsement, Ron Paul is to be commended and recognized for his leadership. He is definitely consistent, clear, and has some ideas that should be seriously considered. The ground swell of support for him, particularly on the Internet, has been nothing short of amazing.