Bump for a later read.
I guess they don't teach economics in journalism school.
An increase in the cost of an item will increase the demand for substitute items.
If you raise the cost of corn as a food worldwide (by shifting a significant portion away from the food supply) you will raise the demand, and the price, on substitute items such as wheat and rice.
Of course, he's in the pocket of "big corn."
There are so many myths about oil and oil pricing that it is treasonous and un-American to suggest high gasoline prices are actually great for America, so we won't do that here.
More folks should read this... without considertion for other opinions the “left-libs” keep folks dumb and dangerous...
I think the author makes a great point about the numbers of people emerging from poverty worldwide. One of the huge benefits of our trade with China has been the increasing wealth among the Chinese people, increasing demand for everything, including food.
However, I would debate this author over the reasonableness of ethanol.
First, with oil at $100/barrel, ethanol still cannot be produced without a subsidy....the ethanol crowd pushed for ethanol at $30/barrel with all sorts of competitive claims.
Second, if ethanol does become competitive to manufacture, it must be sold approximately 25% CHEAPER than gasoline to offset the reduced fuel economy delivered by ethanol.
Third, ethanol is turning out to produce emissions far more dangerous than gasoline. This will need to be addressed via more expensive automotive emission systems, costing the consumer even more.
Lastly, those hedging their bets on biodiesel are facing similar financial obstacles.
Oil is still cheaper to obtain and refine than anything else.
The author is correct, the world’s populations are emerging from poverty and consuming more. They will need oil on a far larger scale than what is consumed today. However, the United States refuses to explore and drill for oil, putting us in the position of being left behind the rest of the world.
I didn't see anywhere in this article where it was stated how many gallons of oil it takes to make so many gallons of “less efficient” ethanol.
For example, if it takes 1.25 gals. of oil to make 1 gal of ethanol (just a hypothetical assumption), then we are becoming more dependent on “foreign” oil then before ... am I wrong?
The problem is that the subsidies shift biofuel production to favored producers (i.e. corn farmers) rather than the ones the market would naturally select (i.e. developers of techniques to produce fuel from otherwise worthless — and therefore dirt cheap — biomass).
“That’s because I’m on the board of directors of Earth Biofuels, a Dallas-based producer of fuels including ethanol and biodiesel.”
and that’s why your entire article is a steaming pile.
If biofuels were so great the producers wouldn’t spend all their time try to suckle at the federal teat. But biofuels are nothing but a destructive waste of money extorted from taxpayers.
And anyone calling himself a conservative who supports this boondoggle is deluded or a liar.
Of course, the first thing people do as they emerge from poverty is improve their diets. They can afford to buy food now, so they do. That’s what’s really driving up the price of rice.
So all these people lept into the middle class last year and it just happened to coincide with an insane rush to bio-fuels?
In 2007, US corn production rose to 349 million metric tons. Of this, about 62 million tons were used to produce ethanol, of which 21 million tons of dried distillers grains were returned to the grain market. This left a whopping 308 million tons available for consumption and export — an increase of 110 million tons, or about 82 percent, over the 1995 figures.
What the writer is leaving out is the grain that was snatched up at the then low prices and is even now stored away for future bio-fuel use. Most of the new ethanol plants are just now coming online, making these figures meaningless.
It’s actulally a tax credit to the gasoline excise tax that only goes to the blender not the producer, which is now 51 cents per gallon of ethanol used. The only incentive for alcohol production is the small producers credit of 10 cents for production under 15 million gallons per year with a capacity of no more than 30 million gallons per year.
You could argue that this would subsidize ethanol production by allowing blenders to pay more for ethanol, raising the breakeven price of production and allowing producers to make a profit at a higher corn and natural gas price. But this isn’t reflected in current prices, as gas and ethanol are selling about the same on a BTU basis.
As far as the burning our food argument, if ethanol production is burning our food than so is soft drink production.
How many times in the last several weeks have I suggested the impact of the BRIC economies (Brazil, Russia, India, China) and their impact on competition for all resources only to be slandered by urban dwellers with expertise in agriculture? And once again, I don’t have a problem with discarding subsidies as long as Ag is not cherry-picked while others are ignored. Tax breaks for all businesses, subsidies, welfare, housing, subsidies for retirees, medicaid, medicare, etc. Git rid of them all to make for a level playing field.
Most urban dwellers just hate these USDA figures on Ag production and buy the oil business and old media vilification of farmers.
[snip] Virtually all these people are protesting sharp rises in the prices of rice and wheat, which is what they eat. (Mexico is an exception, because Mexicans use corn to make tortillas.) Since no one has ever converted a rice paddy to a cornfield, the simple notion that rice now costs more because we've converted land from growing food to growing fuel cannot possibly be correct... the real reason wheat prices are up is that production is lower than it otherwise might have been, because of new strains of fungi that are cutting yields and because of a six-year drought in Australia, which is among the world's major wheat suppliers... In 2007, US corn production rose to 349 million metric tons. Of this, about 62 million tons were used to produce ethanol, of which 21 million tons of dried distillers grains were returned to the grain market. This left a whopping 308 million tons available for consumption and export -- an increase of 110 million tons, or about 82 percent, over the 1995 figures. During these years, the US population increased by about 14 percent, from 264 million in 1995 to 301 million in 2007. We needed only about 25 million additional tons of corn to meet our rising domestic, non-ethanol consumption and export requirements. In fact, we produced an additional 126 million tons. Obviously, the notion that our increased use of corn for ethanol has "caused" food shortages is false. [end]Everyone on FR should know better than to repeat the ridiculous leftist garbage regurgitated through their good friends the MSM -- food shortages are in large part due to a rise in production costs, an effect brought on by the sharp rise in the price of crude. If you want 1 to 2 per cent of US employment to vanish really quickly -- that's about the number of people who grow the food -- get rid of price supports. That'll keep people from crossin' the border and takin' our seasonal jobs! (burp, scratch crotch)
Campaign to vilify ethanol revealed
ethanol producer Magazine | May 16, 2008 | By Kris Bevill
Posted on 05/17/2008 9:22:13 AM PDT by Kevin J waldroup
finally some common sense emerges.