Kansas teams with GM to build ethanol fueling stations. "Going around Big Oil"

[JohnWxy]

http://www.bizjournals.com/wichita/stories/2008/10/13/daily40.html

As part of the public-private partnership, Kansas and other states will work with GM to advance location, development and usage of E-85 infrastructure. The states will receive technical support from GM to assess best locations for E-85 infrastructure, and GM will work with alternative fuel experts to optimize E-85 supply to states and will leverage its network of dealers, plants and offices to promote and advocate E-85 usage.

Alabama, Florida, Idaho, Missouri, Mississippi, Nebraska, Ohio, Tennessee and Wisconsin were also selected for the project.

[pam4water]

1. Yeah they are going around big oil straight to big natural gas and big agro! Ethanol is a frawd!

All the the current ways to produce ethanol from crops other than sugarcane use more fossil fuel to produce that they save by replacing gas. And very little of the US is suitable for growing sugarcane. Yes it piratical in South America. But they don't produce it in excess of what they use. They are looking to sell ethanol to the US, but what is the point of shipping ethanol using more fossil to the USA. I think the only goal of exporting ethanol to the US would be to increase export revenues to Brazil etc.

Ethanol form corn is not carbon neutral. It takes a lot of fertilized -- fertilized made using natural gas. And harvesting it right now is power by diesel. Often the corn need to be dried with natural gas heaters before it can be harvested. You have to heat the alcohol to remove the water. You spend more fossil fuel making corn ethanol than you save by using ethanol. Corn is also a poor choose for making ethanol it has a lower yet of calories per acre. The numbers that say corn ethanol reduces the the amount of CO2 released by 20% to 30%, but this studies include energy stored in the corn stock which no one has found a good way of using yet. There are electoral generators that run on sugar stocks after the sugar has been removed form them. But I have heard of a generator running on corn stocks.

There are multiple crops that would have a better yield but still might not be carbon neutral. But corn is one of the crops that is subsidized. And the big argo does not want to risk the subsidies they have now so they push for corn ethanol. The large agro companies are getting a large part of the 20 billion a year in farm subsidies.

We could be using the natural gas that goes into ethanol production for electricity production or heating homes. Or even just compress the natural gas and use that to run gas and buses. All of the these would be a more efficient use of fossil fuels.

[guidoo]

2. Ethanol is not a fraud..

Ethanol is not a fraud, what is a fraud is the way corn has been pushed as the "source" for ethanol.

You a quite right stating that sugar cane , while much more efficient can only be grown in more tropical climates. Try a little research on prarie grass, more efficient than sugar cane and can be grown in almost every region of the US. Granted the warmer climate areas would be able to produce more due to the longer growing season.

[pam4water]

3. I have read up on these:

Crop litres ethanol/haUS gal/acre
Miscanthus14031 1500
Switchgrass10757 1150
Sweet Potatoes10000 1069
Poplar Wood (hybrid)9354 1000
Sweet Sorghum8419 900
Sugar Beet6679 714
Sugar Cane6192 662
Cassava3835 410
Corn 3461 370
From an informative wiki entry that got deleted.

But ethanol has a water affinity. You are always going to have to put a lot of energy in to bring to purify it to the 99% that is used and fuel, unless you create an engine that can tolerate more water in the fuel. And you will have to start harvesting crops by hand like they do in Brazil to really make it work. That is a lot of energy that goes into run the machinery to harvest as well as the fuel that harvesting crops uses. That would be a major shift int he labor set up of the USA and create a bigger class divide. And high yields form crops still require fertilizer form fossil fuels. From what I've read on most grass they still takes a lot of fertilizer produced from fossil fuels to give high yields.

[JohnWxy]

4. Actually, ethanol returns more energy than is consumed to produce it. This has been proven some

some time ago. Farrell and kammen's study published in Journal Science, Jan 2006: Ethanol Can Contribute to Energy and Environmental Goals pointed out that Pimentel's and Patzek's "stuff" (can't really call them studies_JW) included data which could not be confirmed as to accuracy and incorrectly assumed "that ethanol coproducts (materials inevitably generated when ethanol is made, such as dried distiller grains with solubles, corn gluten feed, and corn oil) should not be credited with any of the input energy and by including some input data that are old and unrepresentative of current processes, or so poorly documented that their quality cannot be evaluated" (MY emphasis_JW).

Ethanol saves us more money than all the subsidies cost - even if you throw in crop subsidies to corn: The shocking truth about ethanol subsidies

Argonnne National Laoratory study on energy balance of ethanol.

USDA study: ethanol energ y balance 1.67: 1 (it's higher than that now, this study is a few years old.

critics of ethanol discredited (Pimentel is a retired professor of entomology, Patzek a former Petroleum engineer for Shell Oil

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=115&topic_id=164765">OECD report confirms oil costs biggest contributor to food prices

HOw much impact on gasoline consumption can ethanol have? how about a 50% reduction

There are better crops than corn for making ethanol but they are not feasible right now. If farmers can adapt them (Sweet Sorghum is one. MExico sees potential in Agaves) we will use them. But for now there is no viable alternative to corn (except for sugar cane for parts of Louisiana and Florida) to what we are already using. As soon as better crops become available we should use them. (NOte Sweet Sorghum has special requirements. It rots so fast after harvesting you have to start processing it into ethanol very quickly meaning you could only grow it very close to an ethanol processing facility.

The one thing about making ethanol from corn is you retain all the protein from the corn and it becomes Dried Distillers Grains and Solubles a valuable high protein feed supplement which replaces the corn used to make ethanol. There is no such bi-product from sugar cane.

Corn is certainly not perfect but it is better than doing nothing. As Francisco Blanch, commodities strategist for Merrill Lynch has indicated Ethanol is keeping the price of gas DOWN abut 15% because of the Elasticity of Demand for gasoline. Thus since petroleum related costs for farm commodities constitute about 38% to 47% of the total cost of these commodities ethanol is bringing DOWN the price of farm commodities abuot 6% or more than any competition for corn from ethanol is pushing up the price of commodities.

Without Ethanol this summer, when gas hit $4.10 a gallon it would have hit $4.82 a gallon. Of course, it never would have got to $4.82 because around the $4.40s area people would have so severely curtailed their spending to meet the needs of food, fuel and housing that we would have had no money left over for anything else. The result would have been millions of people laid off and we would have been going into a depression - even before the Phil Gramm Credit Catastrophe. So you see, although few realize it now, ethanol actually saved our collective ass.

Have a nice day. (remember, a brain is a terrible thing to waste. Get and stay informed.)

[JohnWxy]

5. Here are the facts on subsidies see link (uses data from USDA)

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x167995

"the total subsidies for corn (this includes sweet corn as well as field corn for animals which is the feed source for ethanol) in 2007 came to a little over http://www.geocities.com/jwalkerxy/crop_subsidies_prodct.htm">$2 billion. Quite a lot, right? Well, American farmers produced over 13 billion bushels of corn that year. So the subsidy figure per bushel was $.15665 per bushel. (actually, you'll see at the link that this is a lower subsidy per market value of the commodity than either wheat or cotton). Since ethanol distillers produce about 2.8 gallons of ethanol per bushel, that figures out to about 5.6 cents per gallon. ... No,, that's not a typo, it's 5.6 cents per gallon of ethanol.. Add that to the $.51 per gallon Federal petroleum excise tax credit (for 2007) and you get a total of $.566 government support per gallon (in 2008 and beyond that figure would be $.516 : .46 + .056). "

And how much did we save on Oil NOT imported because of ethanol in 2007-2008: about $8,273,609,280

[AdHocSolver]

6. Ethanol for fuel is bad because it reduces MPG AND it increases the cost of food.

I demonstrated to my satisfaction many times in the past ten years that ethanol gives poorer gas mileage.

Comparing gas mileage when using straight gasoline with gas mileage using gasoline with ten percent ethanol in three different cars, the ethanol gas consistently got 3 to 4 fewer miles per gallon.

No oil is saved since one needs to buy more fuel to make up for the fewer MPG with ethanol.

At the same time, agribusinesses are switching from growing food crops to growing corn for ethanol which makes them more profit. This is reducing the supply of food grain and causing its price to rise. Since American food producers are now importing grain for use in food for humans and livestock, grain prices are rising in those countries causing hardship for the poor people there.

Everybody, except agribusinesses and the oil companies, loses. Ethanol use in fuel does not save oil and it is causing hardship for people in the form of higher food prices everywhere.

Ethanol use still wastes fuel. Current technology exists to produce more fuel efficient cars. Ethanol use still keeps us dependent on the oil companies for transportation. Increased mass transit, mandated fuel efficiency standards, and new technologies such as hybrid-electric vehicles that do save fuel are the only solution to many economic and ecological problems.

[JohnWxy]

7. Detroit does not make Flex fuel engines to take advantage of higher octane rating of ethanol.

Ethanol blended to 10% is not even discernible difference in mileage (actually some cars do a little bit better - able to take advantage of the higher octane rating). Ethanol's octane 113-115, high test gas 92-93. IF Detroit used turbo-charging or super-charging with the sensor that tells the engine when E85 is being used it could go to "boost" condition and take advantage of the higher octane.

http://www.biofuelsdigest.com/blog2/2008/05/28/indy-racing-league-tech-director-said-cars-can-get-better-mileage-on-e100-than-gasoline-engine-optimization-is-the-issue-2/


http://www.autobloggreen.com/2007/12/19/video-indy-racer-says-he-gets-better-mileage-on-ethanol/">Indy racer says he gats better mileage with ethanol


In the video above from the Sundance Channel show, Big Ideas for a Small Planet, an Indy race car driver says he gets better mileage on ethanol. First he says racing can be green, that the car gets more power on ethanol and then he says he gets a lot better mileage. So much better mileage, in fact, they had to shrink the size of the fuel tank. Here is the exact quote:

"First thing that we've noticed with the transition, from the ten percent to hundred percent ethanol this year, is that we have a broader power band and more torque. So the car is pulling better and accelerating better out of the corner. We also have gotten a lot better mileage, so we are reducing the size of the fuel cell (i.e. fuel tank_JW) from 30 gallons down to 22 gallons. We are out there testing this under the toughest conditions that we can and that's going to make better-performing cars that can run ethanol more efficiently out on the road."


NOTE: reducing the fuel tank from 30 to 22 indicates 26.6% BETTER MPG.

[AdHocSolver]

8. I drive "normal" cars, not race cars, and I consistently got noticeably less MPG with ethanol.

If ethanol has a higher octane rating than gasoline, then I can see where racing cares, which are run continuosly at high RPM's, would get better fuel mileage. However, normally driven cars will NOT take advantage of higher octane, and DO get less gas mileage with ethanol added to gasoline.

Moreover, using corn-based ethanol for fuel drives up the price of all grains, which drives up the cost of food, so the consumer gains nothing by using corn-based ethanol. That idea that ethanol provides any benefit to the people is a total fraud.

[JohnWxy]

9. I guess I'll have to repeat myself. ANY ICE with turbo-charging or super-charging can take

advantage of the higher octane rating of ethanol. Ford motor corp. is planning on building an ethanol enabled direct injection engine which will get http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x76034">25% to 30% better fuel consumption while only using 5% ethanol (E85)and 95% gasoline. They are shooting for 2010 for mass production and sales.

The idea that demand for corn to make ethanol is driving up food prices is based on hysteria. currently the price of corn (along with almost all commodities) has dropped significantly since July. So corn is down yet the demand for all grains and the demand for ethanol has not diminished. What?? but if ethanol is the reason for the rise in commodity prices how can that be??? IT CAN BE BECAUSE the tremendous amount of speculative money and commodity index fund investment has been coming out of the commodities futures market. and this investment and speculative activity is what mostly drove the commodities prices up.

NOw for some facts of life regarding petroleum prices and farm commodity costs:

There is something called the ELASTICITY OF DEMAND FOR GASOLINE that the OPEC oil ministers are acutely aware of. If supply is increased a little too much (like about 1%, the price for oil and gas goes DOWN - (significantly, as far as OPEC oil ministers are concerned). Conversely if the supply of gas is less than demand the price goes UP significantly. This is why the OPEC oil ministers monitor their production of oil so closely. NOw since ethanol now supplies about 4 to 4.5 percent of our fuel supplies it is bringing DOWN the price of gas. HOW MUCH?? Francisco Blanch, commodities strategist for Merrill Lynch, said that ethanol brings down the price of gas about 15%.

This summer when gas went to $4.10 a gallon - WITHOUT ETHANOL IT WOULD HAVE GONE TO $4.82. BUT ACTUALLY, I DON'T THINK IT WOULD HAVE GONE THAT HIGH. WHY??? BECAUSE AROUND $4.40 everybody would have so curtailed their spending on everything other than gas, food and housing there would have been nothing left for anything else. THe result?? A lot of people would have been out of work. and as millions were laid off we would have been headed into a depression - and this is before the credit catastrophe! SO YOU SEE, ETHANOL KEPT US FROM GOING INTO A DEPRESSION THIS SUMMER.

Now, for some fundamentals about farm costs: about 38% to 43% of the cost of producing farm commodities (corn, wheat, soybeans etc) is for petroleum related products (fuel and lube, fertilizer and chemicals). Since ethanol is bringing the cost of gas (and oil) down about 15% that means it is bringing DOWN the price of farm commodities about 6%. So, any increase in the price of food caused by increased demand for corn from ethanol (realistically: perhaps 2% to 3%) is at least balanced out by the reduction caused by ethanol in the cost of petroleum related costs for farm commodities. In truth ethanol has little to no affect on the cost of farm commodities because it reduces the price of oil.

[AdHocSolver]

12. There are lies, damn lies, and (economic) statistics.

(Turbochargers are complex, costly, and absurd to add to an engine to increase gas mileage, especially for the average car.)

The internal combustion engine (ICE) has got to GO. It is inefficient, polluting, and maintenance costs are exorbitant.

Whereas an electric motor SHUTS OFF when the vehicle is stopped, an IC engine-only vehicle has to run continuously to maintain operating temperature or the engine loses efficiency and performance. (I know that this is so because I have had thermostats fail in cars in the winter time.) At the same time, running continuosly produces so much heat that a complicated cooling system is needed to keep the engine from seizing up and destroying itself.

Electric motors are, for all intents and purposes, zero emissions motors. This is totally untrue for IC engines, and as an IC engine wears, or merely needs a "tune-up", it pollutes even worse.

IC engines produce their best power and torque at relatively high RPM's, and so need a transmission and a number of gear ratios to operate properly. Most transmissions are of the automatic variety. They are very complex, waste fuel, and generate heat which has to be dissipated by connecting the transmission to the cooling system.

All the heat generated and required to be removed uses fuel. More accurately, the IC engine wastes a lot of fuel to operate properly.

The IC engine needs oil changes, tune-ups, muffler replacement, as well as an assortment of repairs. IC engines and their transmissions contain hundreds of parts.

Electric motors, on the other hand, have much fewer parts, require little maintenance, and are much more efficient in their use of energy. Because electric motors can be designed to produce high torque at a wide range of RPM's, only simple transmissions are necessary to drive the wheels. Electric vehicles can take advantage of regenerative braking to recover energy and reduce wear on the vehicle's brakes.

Electric powered vehicles, whether plug-in or hybrid, would cost less to produce, cost less to maintain, cost less to operate, use far less energy, and would pollute much less. Electric vehicles can be designed to give high performance while still using little fuel and producing little pollution. The Tesla electric vehicle can go from zero to 60 MPH in four seconds.

By the way, the demand for corn IS driving up food prices as agribusinesses are shifting from producing food grains to corn for ethanol. This is reducing the supply of grain for human and animal food, and driving up food prices in other countries such as Mexico.

There is no way to know what oil prices would be without ethanol since the markets are so tightly controlled by the oil companies and OPEC. The supply of oil is fine-tuned to maximize profits. Your hypotheticals are meaningless obfuscation since there is no "free" market in oil. Then there are the government subsidies in play for farm products, as well.

I am well aware of economic theory and buzzwords as I have a degree in the subject. I have considerable knowledge about cars as I have been repairing them for over 40 years.

[sendero]

14. Exactly..

... internal combustion engines are a dinosaur whose time has come and gone.

They have nothing to recommend them, they are wasteful, complicated, noisy, polluting and soon to be obsolete.

The sooner the better.

[JohnWxy]

16. AND THEN THERE IS IGNORANCE.

Maybe you should enlighten Ford and the three MIT researchers who designed the ethanol enabled direct injection (turbo-charged) engine as to the impracticallity of blown (super-charged and turbo-charged engines). While you're at it maybe you better contact Audi too and help them out with your expertise (LOL): Audi's new A4 with super-charged V6 gets 26% better gas mileage than the V8 it replaces

YEs, electric is better - and when do you thiNk they will be selling enough to make much of a difference. They won't be cheaper initially or for a long time, 'Tonto'. GM, is guessing the Volt may cost $30,000 to $45,000. You can turbo-charge a car for a bit less than that. but certainly the electric is the target, but doing nothing till they can make much of a difference is an option we can't afford. It would be nice if we could flick a magic wand like Harry Potter and make electric cars happen tomorrow but it will be years before they will be making a significant impact on total gas consumption - mainly because their cost puts them out of reach of the typical car buyer. We can't just sit around a wait for the electric cars to make a difference/ We'll be out of money and time long before they do.

You like to repeat the going hysteria lately (this is a substitute for actual reading and thinking on the issue) that ethanol is driving up the price of food around the world, but as i said, petroleum costs represent about 38% - 43% of farm commodity prices and since ethanol is driving the cost of petroleum down about 15% that means ethanol is lowering the cost of farm commodities about 5%-6%. This is equal to or greater than any price increase to corn due to increased demand for corn from ethanol. Farm prices for commodities constitute about 19% of the retail price of food at the market according to the USDA.

Regarding the Elasticity of Demand for Gasoline - here is a link to paper on the universally recognized reality of Elasticity of demand for gasoline (someone with a degree in economics should be aware of the elasticity of demand for products. this is NOT an arcane subject within economics): Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand. Of course, I know you won't take the time to read it. But just in case you do, check page 106 of the report.

[JohnWxy]

10. Facts on cost vs benefits of ethanol:

subsidies total cost 2007: $2 Billion

amount saved on oil not imported: $8.2 Billion

(that's net - after subtracting the .51 cent per gallon excise tax credit given to blenders for each gallon of non-petroleum fuel they blend - that's a return of an Petroleum fuel excise tax they should not be paying for a non-petroleum fuel they are blending.)

That's $8 Billion that did not go out of the country.

You really should try to get acquainted with the facts.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x46164#46206

[Dover]

11. AROUND big oil? How much fuel does it take to produce ethanol?

It seem like only yesterday when the big auto companies were placing big ads announcing that
we'd all be driving fuel cell cars by 2010.

Blah...blah...blah..

[JohnWxy]

13. Francisco Blanch, commodities strategist for Merrill Lynch stated that ethanol is keeping the price

of gas down about 15%. Exxon Mobil is getting out of the retail gasoline business (gas stations) - I wonder why? THey started buying up gas stations more than 20 years ago so they could have more control over pricing. Now they're getting out. Why? because with biofuels appearing to be here to stay they know they won't be able to control prices as they would like. It only takes a few percent of the fuel supply to be coming from ethanol to constrain them from pricing what they want. That's because of something called the Elasticity of Demand for gasoline.

have a nice day, "blah-blah". :)

[AdHocSolver]

15. Elasticity of Demand....blah, blah, blah.

Elasticity of Demand refers to the changes that occur with demand as the price changes. When a product exhibits an elastic demand, the quantity purchased increases as the price drops, and, conversely, the quantity purchased decreases as the price rises. If a product exhibits an inelastic demand, the demand for it remains about the same no matter what the price changes are.

For example, if the price of beef goes up, people can substitute less expensive chicken for beef, and so the demand for beef goes down. If a person gets sick and needs a certain medicine, they are going to buy it no matter what the price. Inelastic demand is what keeps the price of drugs up when you don't have a bargaining agent, such as a single-payer health insurance plan.

The price of gas dropping has nothing to do with ethanol substituting for oil.

First, gas mileage drops with ethanol use so the amount of gasoline one buys to travel the same distance goes up. Second, gasoline consumption is dropping because tens of thousands of people are losing their jobs every month reducing their need for gasoline to commute to and from work everyday. In addition, all costs are going up due to inflationary pressures so that people are curtailing their traveling, such as vacations, to save money.

Ethanol has been in increasingly widespread use for around the past ten years and it had NO effect in limiting the price of gasoline during that time. In fact, if there were elasticity of demand for gasoline, the price of gasoline should have been DROPPING during the last few years as ethanol usage has INCREASED, which supposedly would reduce the demand for oil and so cause the cost of gasoline to drop.

Instead, as ethanol usage increased, so did the price of gasoline. Therefore, ethanol could not have replaced oil nor reduced the demand for oil. In fact, ethanol usage must have been a factor in driving up the cost of gasoline. Elasticity of demand could not have been operative here in the way that you imply.

As for the reason why Exxon Mobil is selling gas stations, it is probably for the same reason many companies outsource work to contracting firms. They eliminate the need and the cost of providing health benefits, administering pension funds, and the general cost of "owning" workers. It is the same reason that airline companies are selling their airplanes to third parties and then leasing the planes back to fly them. These are all accounting "gimmicks" to cut costs and reduce the taxes that they incur through "ownership".

[JohnWxy]

17. I don't want to shake that little world you've constructed for yourself. You apparently like it

better than reality. Your statement :"gas mileage drops with ethanol use so the amount of gasoline one buys to travel the same distance goes up." is hilarous - it is utter nonsense.

I think Fransisco Blanch, commodities strategist for Merrill Lynch knows what he is talking about. I also think the economists who have published hundreds of papers on the subject and written thousands of words in text-books about the elasticity of demand and supply for many products are not that confused on the subject that they could totally misunderstand the concept while you understand it better than all of them.

Blanch made this statement about the price of gas before the price dropped due to lowered demand(he said this in an interview for WallStreet Journal earlier in the year). However, it applies now too. We still are paying less than we would be paying if ethanol was not meeting some of our fuel needs/demand. As of Aug 7, the gas price dropped 21% from it's July high, with a drop in demand of 2.3%. Ethanol being 4% to 4.5% of the supply is meeting 4% to 4.5% of the demand. You can compute for yourself the price change 4% to 4.5% would induce (that is if our demand exceeded current supply by 4% 4.5% - if ethanol was not meeting 4% to 4.5% of our fuel demand.). (however, this is just one reading. studies on the elasticity of demand for gasoline use many observations of price changes vs supply/demand changes over periods of time to draw conclusions as to demand / supply elasticity).


ethanol causes the price of gas to be lower by substituting for gasoline. This is hardly a novel concept. To say ethanol does not cause the price of gas to be lower is simply to deny reality. If ethanol were not being sold they would have had to supply 4% to 4.5% MORE gasoline and that would have driven the price up even more. Anyone who tries to deny this fact is living in their own separate reality. That is your choice. I Hope you enjoy it there.


Exxon mobil is getting out of retailing of gasoline because the reason for beiing in it is no longer viable. they can no longer so completely control the price of gas at the pump. their personnel costs for the retail operation were miniscule in proportion to those of the rest of their corporation. There were very few people in the retail operation compared to the rest of the corporation. You don't really think they gave health care and retirement plans to gas station workers do you?(LOL) Many of them are not even full-time..

The reason for being in the retail end was to help control pricing. Now with another fuel in the market that control mechanism has had a monkey wrench thrown in it. Ethanol at 4% to 4.5% of the gasoline supply is enough to bring down the price of gas 15% (or possibly more) thus diminishing their abillity to dictate prices. So they are getting out - because the writiing is on the wall. Bio fuels are here to stay.


NOte also from the article in USA Today ("Oil prices close below $119 after inventory report" :

"The U.S. Energy Department's Energy Information Administration said crude supplies rose by 1.7 million barrels to 296.9 million last week, slightly more than the 1.2 million-barrel increase expected by analysts surveyed by energy research firm Platts.

The EIA said inventories of distillate fuel, which include diesel and heating oil, jumped 2.8 million barrels to 133.3 million barrels, above the 2.3 million barrels expected by analysts."
---------------------------------------------------------------------------------------------------------------------------

.... Distillates inventory rose 2% and this was followed by a drop in prices of 21%. The result of a drop in demand and supply exceeding demand lead to the increase in the inventory which resulted in a price drop of 21%. Even if demand had not dropped, if supply exceeded demand (leading to an increase in inventory) you would have had a price drop. This is why the OPEC oil ministers monitor their production so minutely. They do not want to increase supply too much and cause a drop in prices. Less money for Rolls Royces and parties(women).

The market doesn't care if demand dropped or supply increased - all that matters is if supply exceeds demand inventories build and the price comes down.