One Tank of Ethanol = Food for One Year

The Stalwart submits: This from Fortune makes Ethanol seem like a very short sighted solution to high oil prices:

We are facing an epic competition between the 800 million motorists who want to protect their mobility and the two billion poorest people in the world who simply want to survive. In effect, supermarkets and service stations are now competing for the same resources.

This year cars, not people, will claim most of the increase in world grain consumption. The problem is simple: It takes a whole lot of agricultural produce to create a modest amount of automotive fuel.

The grain required to fill a 25-gallon SUV gas tank with ethanol, for instance, could feed one person for a year. If today's entire U.S. grain harvest were converted into fuel for cars, it would still satisfy less than one-sixth of U.S. demand.

I think the key idea here is Opportunity Cost. If we just take the simple example above, lets try and guess at what 1 year of nutrition is worth. Fair enough we're probably talking a low-end corn heavy diet, but thats enough to save lives for some. As we remember an NGO's TV ad saying that for the price of a cup of coffee we could feed a child for a day, we could use a number of US$1/day for cost. This simple math would result in US$365 of opportunity cost is lost production. To be more conservative, even if we say just US$0.25 per day of lost value from food, we're still at a good US$90 in lost food production just for one tank of ethanol. Food for thought.

As a side note, fast forward a few years and what we really need is biotech to give us a nice "fuel plant" with its ethanol productive capacity maximized. (there's the idea for Monsanto (NYSE:MON)) Then maybe the fuel could be more cost competitive. Biotech could be oil's worst enemy one day.

Comments

[Lissa Tucker:]

What about CELLULOSIC EHTANOL? This form is not grain-based.

I think the general population is just not that educated in its entirety on this specific issue. This article is one-sided, biased and serves no purpose but to detract from, not add to, all the positive renewable energy efforts achieved over the last years. My suggestion is to be more liberal in your research prior to scribing this sort of material.

2006 Sep 10 09:50 PM

[CrossProfit_:]

You mean the Fortune article. The Stalwart seems to be 'promoting' renewable energy, albeit in a roundabout way. Agree?

2006 Sep 11 07:18 AM

[Lissa Tucker:]

If in fact, that is the case...I think the title should have been reworked to better-reflect it. Agree?

2006 Sep 14 03:36 AM

[Lissa Tucker:]

BTW - Cellulosic Ethanol is made from Switchgrass. In this regard, it is known as the "Rumplestilskin Fuel" (i.e., straw to gold -- switchgrass to gas). This type of ethanol is the cleanest, and will not result in "lost meals for starving kids in Africa," per se.

2006 Sep 14 03:41 AM

[Michael Rin...:]

It's made from more than switchgrass; it could be made from anything laying around that otherwise would go to waste.

Anyway, it would be irrational, and a detriment to our economy and therefore the global economy, to avoid ethanol technology on the basis that what drives its production just so happens to be the raw material that is used to make food. We're simply optimizing, creating new wealth in new industries. The best thing these poor folks could do isn't wait for a hand-out but start growing corn, grain, or anything else that we're consuming voraciously and driving up the prices for. That's a win-win for everybody, but sometimes it's hard for socialists to understand that. Much easier to play a guilt card.

2006 Sep 19 02:44 PM

[Lissa Tucker:]

Absolutely correct regarding the biproduct component which is actually a benefit. Your commentary is less than lucid and conflicting...but I appreciate where you are coming from. The deal is, that cellulosic ethanol is a great short-term (5-year) option. While there are far better alternatives, at least this one would allow the general population to not continue to remain sitting-ducks in a current system that is more harmful than not. Which brings me to the point -- instead of offering up mere problems with a product or idea, why not generate a "problem-solution" approach instead? For example, a shortage of corn in developing countries could be fixed by applying micro-financing methods. Rather than point fingers and pigeonhole folks as "socialists" or "playing a guilt card" which really derails from the main issues here....why not try to alter your own mindset to arrive at solutions instead of problems. You can either have a bucket of water or a can of fuel going into a fire -- which do you choose? Get my drift...?

2006 Sep 25 12:14 AM

[Lissa Tucker:]

P.S. Renewable energy is an entirely open playing field when it comes to a new business sector. The potential is limitless, the profits are optimal, and the mindsets are still closed...Hopefully, this will be a better time to grow the sector than in the 70s.

BTW - I have just read an article about "green elephants" -- it's about time.

2006 Sep 26 03:08 AM

[Lissa Tucker:]

FYI -

"In a note to investors, Brown said federal and state ethanol legislation coming up in the first half of 2007 will support Pacific Ethanol, as well as its competitors. But new regulations in California that change ethanol blending levels will especially help the company, since it will result in a 100-million gallon capacity boost...."

2007 Jan 13 12:35 AM

[ganeshji:]

I think this is a very import post. The most important thought here is what do lose or what we will lose in the future. In the last few years food inflation has been very real in fact an investor would have got a better return on wheat or corn then oil.
Here are the return rates
Wheat futures prices have tripled since 2004
Corn prices have almost tripled since 2005
Soybeans have tripled since 2006
Crude oil is up about 60% in the past three years

We might be heading down the wrong road to energy independences. However, this might be America’s cure from eating too much. All joking aside two possible outcomes:

1. US Government keeps passing rules to that helps the ethanol industry. This will work if we become more efficient in crop production. I don’t think we can add that much more land to production without a change in the workforce and the some effects to the environment so I think it would have to be efficient that would stabilize crop prices to make this scenario to work.

2. Rising food cost causes the government to changes the laws on that benefit ethanol. I think the 2nd one is more likely to occur.

I understand this is a very complex issue and my 2 choice are limiting. Looking at real wages vs. inflation I think without a drop energy and food price we could see a changes to how we look at this issue and more important the US Government might change the laws.

2008 Mar 08 11:51 AM

[orrie:]

I like many cattle and dairymen feed much less corn because distillers products make corn stalks a far more palatable, cost efficient feed for ruminants. Animal nutritionists have yet to quantify the amount of corn starch used for ethanol production that is replaced by the previously unused corn stalks. A very good argument can be made that because wet distillers products have a special ability to bring previously neglected cellulose into the food chain there is more food available to the food chain when the starch in corn is romoved for ethanol production. The the resulting coproduct's ability to bring cornstalks/other neglected roughage to dairy and beef rations make the co products far more valuable and productive for the food chain than the starch that is removed during ethanol production:(unharveste... corn stalks, old hay, out of condition roughage) And many ethanol refineries are already removing the corn oil and marketing it directly into food markets. It should not surprise us that grain fed per animal consuming unit is down
significantly and after record ethanol production,normal corn production corn carryout is a very typical billion plus bushels

2008 Dec 18 02:41 PM