Ethanol Production Used More Corn than Farmers in Past Year
October 13, 2011 1:01 PM
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Much of the ethanol produced from the corn was exported overseas
When it comes to removing our dependence on foreign oil there are other options than using electricity or hydrogen to power cars. One of the options is using
to replace some of the petroleum used in our gasoline. The big downside is that most of the ethanol produced in the U.S. today is made from corn.
Corn is an important food crop that is consumed by humans and used as feed for livestock and other animals. Scientific America reports that for every ten ears of corn grown in the U.S. today, only two are consumed by humans as food. The other ears are used for animal feed and ethanol production.
The numbers show that for the year spanning August 2010 to August 2011 the biofuel industry used more corn than farmers used for animal feed and residual demand. This is the first time more corn has been used for ethanol and shows a shifting balance that could spell trouble in the future. Over that year span, farmers used 5 billion bushels of corn and ethanol production used 5.05 billion bushels. Some of that corn did return to the food supply as animal feed and corn oil.
The fear is that the shift from food being the largest use for corn and fuel taking the top spot is a concern that could have significant impact on the world grain market. One of the reasons for the shift to ethanol use for corn is the government subsidies and the import tariffs on foreign ethanol.
Steven Rattner said in a piece written for the
, “Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.”
That means much of the corn being used for fuel isn't making it into American fuel tanks so we still have to import more foreign oil to meet our fuel needs. Some in Congress are working hard to get the subsidies repealed and to lift the import tariff so that cheaper biofuels made from sugarcane can be imported from Brazil. There is also a lot of research going into making ethanol from other crops like
Rattner also wrote, "Even farm advocates like former Agriculture Secretary Dan Glickman agree that the [ethanol] situation must be fixed. Reports filtering out of the budget talks currently under way suggest that agriculture subsidies sit prominently on the chopping block. The time is ripe."
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RE: What the ****?
10/13/2011 3:29:42 PM
Oh yeah silly me, the BIG one being transportation costs. Food has to be delivered to the stores obviously. When diesel fuel hit $4/gal food prices jumped up big time. And have never really gone back down.
RE: What the ****?
10/13/2011 8:43:57 PM
Considering the economic outlook i'd worry more about inflation then gas prices. Inflation has been rising since december 2010. It's now as high as it was was in october 2007 (as well as octrober 2008, high point was in july 2008) and rising.
The big difference being the benchmark interest rate then was 5%, now it's been <0,25% for a long time. That interest rate controls other things, like the amount it costs to service the national debt. How much difference does that 5% make? Thanks to the US government it's easy to show:
In fiscal 2008, the amount of interest paid on the national debt was $451 billion
In fiscal 2011, the amount of interest paid on the national debt was $454 billion
In fiscal 2008, the national debt amounted to $10 trillion
In fiscal 2011, the national debt amounted to $14,8 trillion
So there are 2 options: raise interest rates to combat inflation again, and watch that $454 billion turn into a trillion at 5% interest rates (which still isn't enough because before the crisis it was still rising at those rates and your not printing less money),or don't raise the interest and watch inflation raise prices. Guess what will happen.
...well it's that or the trillion in national debt interest causes so much layoffs that prices will have to decrease which causes a deflationary spiral.
At this point it's dealer's choice really. Do you prefer massive inflation or massive deflation?
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