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Yup. I cover the IRL for an auto racing publication, and I’m supposed to believe in Ethanol, but there are obvious problems with this solution.

The stuff works in a car — that’s not a problem. The problem is that the process of getting corn to fuel takes more energy than it yields. Conversely, petroleum (which is simply biofuel that nature processed for a few bazillion years) has lots of stored energy inside of it, and the process of getting it to your tank takes less energy than you get when you burn it.

Economics definitely kick in here. In Econ 101, the prof always uses grain as an example of perfect competition. If the demand for a grain goes up, it then lowers the supply of other grains in the short term. In the long term, the concept of “economic rent” kicks in, where we see that marginal farm land is pushed into production since the crops grown there are profitable enough to justify the effort.

So, yes, even if ethanol is suddenly viable, and even if we figure out a great way to refine biostuff into fuel, the result will be a massive expansion of food production and a probably rise in food prices.

My local big dairy farmer tells me that he loves the higher corn prices, but says that the price of dairy feed is now so high that he can’t turn a profit with his cows.

''...the result will be a massive expansion of food production and a probably rise in food prices.

So price rises when one expands production? C'mon now. That's surely not what you meant to say.

Probably you intended something more like, ''...the result will be a massive expansion of food production. If this expansion is not large enough to meet the increased demand caused by the subsidised and/or forced usage of ethanol, a secondary result will be a rise in food prices.''

Which, given wheat over $9/bu and corn and beans well higher than 2 years ago, would seem now to be a fait accompli.

''...the result will be a massive expansion of food production and a probably rise in food prices.

So price rises when one expands production? C'mon now. That's surely not what you meant to say.

Which, given wheat over $9/bu and corn and beans well higher than 2 years ago, would seem now to be a fait accompli.

"My local big dairy farmer tells me that he loves the higher corn prices, but says that the price of dairy feed is now so high that he can’t turn a profit with his cows."

Hog wash. Unless he's a stupid farmer and doesn't grow his own feed. I've never seen a dairy farmer who doesn't however, and I'm surrounded by them.

In fact he's be making even more money if he had a lick of sense, because he'd be selling his excess at better prices, while his input costs remain the same as they were before the demand for corn increased. The only cost associated with his corn feed is the input costs associated with planting and growing it, and when growing feed crops, you aren't too concerned over getting the highest yields, and using a lot of incecticides. He's not buying human consumption grade corn at commodity prices, he's growing feed corn.

Plus corn isn't the only feed source. Many use barley instead, and mix it with chopped alphalfa to make their silage. Or other combinations.

That statement doesn't pass the sniff test for anyone who knows anything about farming.

"If the demand for a grain goes up, it then lowers the supply of other grains in the short term."

Find a better economics teacher.

It only puts demand on that one commodity that's in demand. In the SHORT term, that drives the price up. since in the short term other crops are already seeded, there is no change in supply.

In the LONG term, it reduces the supply of other grains because more field is going into producing the expected money maker. At the same time, with more supply of the money maker, the price usually goes down. (which we can see that happening now)

A shorter supply of other grains is a good thing, because it brings the prices up when there isn't a glut of grain on the market, like there usually is. Farmers can actually make money, instead of living off high government subsidies, often paid NOT to grow anything.(this is idle land, which if put into production, doesn't take away from lands used for other grains)

Then there comes the problem of crop rotation, which HAS to happen. You just can't grow corn year after year because it depletes the soil of certain nutreints, increases infestations of insects, and increase a farmers costs of fertilizers.

At best you would see farmers adding corn INTO a rotation in fields where they never bothered to grow corn because the cost of growing it at low prices wasn't worth it, additional machinery purchases, fertilizer costs etc.

"The problem is that the process of getting corn to fuel takes more energy than it yields."

This keeps getting said, and it simply is NOT true. The ratio is 1.34MM BTU ethanol from corn for 1.0MM BTU of energy input. The ratio will be significantly higher if, as, and when the process to produce ethanol from switchgrass is perfected--on the order of 8MM BTU to 1 MM BTU.