What’s Going on with Nebraska Panhandle Farmland Prices?

As the rest of the Midwest’s farmland valuations are cooling off, the Panhandle of Nebraska is on fire.

Jessica Johnson, Extension Educator at the UNL Panhandle Research and Extension Center has provided the following assessment of the situation. (It’s mostly about irrigation and tilling potential of land.) Also, this year’s farmland prices data is showing pastureland to be doing well as compared to other categories.

Farmland values in the Nebraska Panhandle continue to climb, according to results of the annual Nebraska Farm Real Estate Survey released in June. The results reveal that in 2014, the average statewide value of farmland increased 9 percent to $3,315 per acre. In the Panhandle, the average farmland value increased 20 percent to $855 per acre.

Several factors have contributed to rising land values in recent years, including record high farm income, low interest rates, expanding operations, and limited land sales. Even though some of these factors are still in play, the downturn in commodity prices led to more modest increases in statewide cropland values in 2014.

The value of gravity-irrigated cropland in the Panhandle increased 6 percent, consistent with the statewide average for this land class. Center-pivot-irrigated cropland in the Panhandle increased 21 percent to $3,770 per acre. The Panhandle district reported the highest percentage increase for center-pivot-irrigated cropland.

Dryland cropland also showed significant increases from 2013. Dryland cropland with no irrigation potential increased 21 percent to $845 per acre. Dryland cropland with irrigation potential increased 28 percent to $935 per acre. The survey indicated that lingering effects of drought, the conversion of grazing land to cropland, and higher cattle prices could be factors driving up grazing and hayland values.

Non-tillable grazing land increased 9 percent in the Panhandle to $405 per acre. The Panhandle had the lowest reported increase of this land class in the state. Tillable grazing land had an increase of 29 percent to $550 per acre. Hay land had the largest increase of any land class in the Panhandle with a change of 31 percent from 2013 to 2014, resulting in an average hay land value of $1,025 per acre.

More Bad News About Ethanol. It Causes Corrosion and Leakage of Underground Fuel Storage Tanks.

Ethanol got its start as an MTBE replacement when MTBE was found to contaminate groundwater. Both are octane boosters. MTBE, as a gasoline additive, was intended to help curb air pollution but was later found to be a carcinogen contaminant of groundwater.

Fast forward to now. We all know that ethanol policy leads to nitrogen groundwater contamination in corn growing regions, but now we are learning that it may also be contributing to leakage in or around underground gasoline station fuel storage tanks. Furthermore, a São Paulo study suggests that using ethanol in vehicles increases ozone air pollution.

After NIST held a two day workshop here in Boulder a year ago to study how the combination of certain microbes with ethanol may be accelerating the corrosion of steel underground storage tanks of gasoline containing 10 percent ethanol, they have released a new report based on their findings. It focused on sump pumps, among other storage and pumping components. The industry is studying whether certain diesel tanks are now leaking because they previously held gasoline mixed with ethanol.

The ethanol people will probably tell you this is yet another conspiracy by big oil against them. The gas station owners and petroleum distributors, on the other hand, will tell you how expensive it is to replace tanks and pipes and fittings and replace them with fiberglass ones to accommodate this product that is government mandated.

In my view this is an important story. There are good options other than ethanol to be used as octane boosters in our gasoline and it is time to consider them.

Here is the July 29, 2014 article authored by Laura Ost for NIST:

NIST Corrosion Lab Tests Suggest Need for Underground Gas Tank Retrofits

A hidden hazard lurks beneath many of the roughly 156,000 gas stations across the United States.

gas tank sump pump
A NIST study found that corrosion may pose a hazard at underground gas storage tanks at filling stations. The study focused on sump pump components, especially the pump casings (labelled #3 in graphic), which are typically made of steel or cast iron.
Credit: Environmental Protection Agency
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Gas Tank Corrosion
Optical micrographs of severe corrosion on steel alloy samples exposed to ethanol and acetic acid vapors — conditions typical of underground gas storage tanks — after 355 hours, 643 hours, and 932 hours.
Credit: NIST
View hi-resolution image

The hazard is corrosion in parts of underground gas storage tanks—corrosion that could result in failures, leaks and contamination of groundwater, a source of drinking water. In recent years, field inspectors in nine states have reported many rapidly corroding gas storage tank components such as sump pumps. These incidents are generally associated with use of gasoline-ethanol blends and the presence of bacteria, Acetobacter aceti, which convert ethanol to acetic acid, a component of vinegar.

Following up on the inspectors’ findings, a National Institute of Standards and Technology (NIST) laboratory study* has demonstrated severe corrosion—rapidly eating through 1 millimeter of wall thickness per year—on steel alloy samples exposed to ethanol and acetic acid vapors. Based on this finding, NIST researchers suggest gas stations may need to replace submersible pump casings, typically made of steel or cast iron, sooner than expected. Such retrofits could cost an estimated $1,500 to $2,500 each, and there are more than 500,000 underground gas storage tanks around the country.

The NIST study focused only on sump pump components, located directly below access covers at filling stations, just above and connected to underground gas storage tanks. The sump pumps move fuel from underground tanks to the fuel dispensers that pump gas into cars. These underground tanks and pipes also may be made of steel and could be vulnerable, too. “We know there are corrosion issues associated with the inside of some tanks. We’re not sure, at this point, if that type of corrosion is caused by the bacteria,” NIST co-author Jeffrey Sowards says.

Much of the U.S. fuel infrastructure was designed for unblended gasoline. Ethanol, an alcohol that can be made from corn, is now widely used as a gasoline additive due to its oxygen content and octane rating, or antiknock index. A previous NIST study found that ethanol-loving bacteria accelerated pipeline cracking.**

For the latest study, NIST researchers developed new test methods and equipment to study copper and steel alloy samples either immersed in ethanol-water solutions inoculated with bacteria, or exposed to the vapors above the medium—conditions mimicking those around sump pumps. Corrosion rates were measured over about 30 days.

The NIST study confirmed damage similar to that seen on sump pumps by field inspectors. The worst damage, with flaky iron oxide products covering corrosion, was found on steel exposed to the vapors. Copper in both the liquid and vapor environments also sustained damage, but corrosion rates were slower. Steel corroded very slowly while immersed in the liquid mixture; the NIST paper suggests bacteria may have created a biofilm that was protective in this case.

Although copper corroded slowly—it would take about 15 years for 1.2-millimeter-thick copper tube walls to develop holes—localized corrosion was observed on cold-worked copper, the material used in sump pump tubing, NIST co-author Elisabeth Mansfield notes. Therefore, stress-corrosion cracking is a concern for bent copper tubing because it would greatly reduce tube lifetime and result in leaks.

The NIST test equipment developed for the study could be used in future investigations of special coatings and biocides or other ways to prevent sump pump failures and leaks.

NIST held a workshop in July 2013 on biocorrosion associated with alternative fuels. Presentations and information from this workshop can be found atwww.nist.gov/mml/acmd/biocorrosion.cfm.

*J.W. Sowards and E. Mansfield. Corrosion of copper and steel alloys in a simulated underground storage tank sump environment containing acid producing bacteria. Corrosion Science. July, 2014. In press, corrected proof available online. DOI: 10.1016/j.corsci.2014.07.009.
**See 2011 NIST Tech Beat article, “NIST Finds That Ethanol-Loving Bacteria Accelerate Cracking of Pipeline Steels,” at www.nist.gov/mml/acmd/201108_ethanol_pipelines.cfm.

The National Institute of Standards and Technology (NIST) is an agency of the U.S. Department of Commerce.

UPDATE: I have made a correction, since contacted by the author of the NIST article that the NIST conference was actually held in 2013, not a few weeks ago (here in Boulder). I have also added the post from NIST.

Ethanol Profits are Inverse to Corn Profits – For Now

Graph by Don Hofstrand, AgMRC

Ethanol profitability goes up when corn prices go down, and so can serve as a good hedge for corn farmers, provided the ethanol price is strong.

According to Hofstrand, a retired Iowa State University ag economist:

Production and consumption of ethanol remain in relative balance with a slight increase in net exports. This has resulted in a gradual reduction in ethanol stocks which has helped support ethanol price. However, future ethanol usage and price remains clouded due to the ‘blend wall’ and other transportation fuel issues.

source: Do ethanol returns serve as a hedge against low corn prices?

Boulder Pays Tribute to Mork

Two days after Robin Williams sad death, I made my way to visit the Mork and Mindy house here in Boulder. Many people were milling around, traffic was very busy on an otherwise not so busy street, and there were many flowers and notes lining the fence in front of the house. I heard a few sniffles, too. It was all very touching to see, and yes, I, too, was a fan.

Here are a few photos from my visit.