Price of LP/Natural gas

[ILLfarmboy]

LP currently stands at 1.59 to 1.65 per gal. depending on where I get it. (I own my own tank so I can buy from whoever has the best deal) And that is the contract price for 1000 gal. with 10 percent down and the balance due at fill up.

We have talked about the price of corn having very little impact on the price of whiskey but what about gas? I'm assuming distilleries use propane or natural gas, and a lot of it. How will it affect bourbon prices?

[ILLfarmboy]

...

And so we stay on-topic, here's a link to a news article about increased planting of corn this year.

Interesting article. But I Was looking for information on distilleries' use of propane/natural gas and how it might effect the price of the finished product. which is why I started a new thread instead of posting in the "Price of corn" thread.

[barturtle]

Interesting, something I've never thought of asking about. While the bottling lines and such are all electric, the cookers and the steam engines could be either. Probably not the most interesting thing to learn, as it's unlikely to affect the finished product, other than the potential pricing/environmental impacts, but then knowing as much about the production as possible is what these types of questions are all about.

[ThomasH]

In most cases, the boilers that provide the steam to the stills are fired by natural gas. I can't imagine a boiler big enough for any industrial application being easy on gas consumption!

Thomas

[AVB]

I pay 50 cents a gallon more for my 120 gallon tank. Folks would fight for your price here in my part of PA.

LP currently stands at 1.59 to 1.65 per gal. depending on where I get it.

[cowdery]

Corn right now is flirting with $4 a bushel and probably will hit that price by the end of the year. The other grains used in bourbon cost more. Energy costs are going up too. However, distillers get about 5.3 gallons of whiskey from every bushel of grain. Their energy use is similarly efficient. Distillers, for example, use about half as much water in their mashes as they once did, to save water but mostly to save energy.

So, if whiskey is so cheap to make, why does it cost so much? Taxes. The Federal Excise Tax on spirits is $13.50 per proof gallon. That's just one of the many taxes you pay when you buy whiskey. Buying whiskey is very patriotic, since it is so heavily taxed.

Basically, increases in production costs, even large ones, have only a small impact on prices because taxes are the producer's single biggest expense.

[OscarV]

Tax on spirits is $13.50 per proof gallon. .

$13.50 per proof gallon?

I don't understand that. What is the proof of a proof gallon?

[HighTower]

$13.50 per proof gallon?

I don't understand that. What is the proof of a proof gallon?

I imagine by proof gallon, say for example you had 2 gallons of spirit at 50% abv, I believe that would be one proof gallon. Gets charged on the actual alcohol content, not liquid contents.

Similar to how our import duty works. $64.72 per liter of alcohol content.

Scott

[ILLfarmboy]

$13.50 per proof gallon?

I don't understand that. What is the proof of a proof gallon?

I believe a proof gallon is a gallon of 100 proof spirit. That's a US gal. (231 cubic inches)

[TNbourbon]

I believe a proof gallon is a gallon of 100 proof spirit. That's a US gal. (231 cubic inches)

Yes. At 60 degrees F.

[melting]

The corn thing is being blown way out of proportion also. Prices are actually down to about $3.35 according to Friday's Wall Street Journal.

Chris

[TNbourbon]

The corn thing is being blown way out of proportion also. Prices are actually down to about $3.35 according to Friday's Wall Street Journal.

Chris

Ah, but the state average for corn in Iowa (aka, Corn Central!) for July 7, 2006, was $1.9906.

So, a 68% annual increase is "blown out of proportion" how?

Bottom line, my corn flakes are increasing in price more than the rate of inflation.

[cowdery]

I think "blown out of proportion" simply because the market and producers will and can adapt to the new increased demand caused by the new subsidies that are encouraging more fuel ethanol production.

In other words, there is going to be a period of adjustment before we can determine what the "new normal" is.

As for the animal feed issue, all distilleries, including fuel ethanol distilleries (at least those that use grain) produce stillage, which is a highly nutritious animal feed. The fuel ethanol industry calls it a "co-product." Roughly half of the cattle and hog operations in 12 Midwestern states either fed ethanol co-products or considered feeding them to their livestock last year.

It is most efficient to use stillage in liquid form, as it takes a lot of energy to dry it, but it's not cost effective to transport it very far in liquid form, because it takes a lot of energy to move that much water. If feed lots are located close to distilleries, as they were in the 19th century, the relationship can be very symbiotic, but that's another adjustment that will take some time.