Tradewolf

Energy Affecting Food Prices

First of all, you along with most people are sadly in error. The bulk of the alternative ethanol program has not even begun yet. ETOH is only being mixed with gasoline in 10-15% or less on average amounts.

It is an additive, not an alternative. Most of the fuel is still gasoline. Ethanol has replaced MBTE a carcinogen, which replaced TetraEthyl Lead another health hazard. What do you want them to use? Take your pick, Lead, MBTE and its carcinogen and water polution issues, or biodegradable ethanol. You have to have one of them for octane improving, pre-ignition detonation prevention and oxygenation for complete fuel burning according to the EPA. If you want the demand to drop on Ethanol for fuel then we can go back to Leaded gas which is the least evil octane improver other than Ethanol.

Now if the Ethanol program gets off the ground and we see large numbers of E85 cars on the road, then you will see big demand and corn prices would go through the roof, smae as any commodity when demand skyrockets, but WE ARE NOT THERE YET. I do not think we will see that happen as I think the popularity of E85 will not happen due to price self limiting. Do not blame all the food cost increase all on Ethanol which is a great fuel *additive*. Blame it on commoditization of everything which is a global neccessity and the speculators parking all their money fleeing from the dollar into them.

They have made these commodities true alternative hard currencies and this will not change unless the speculative money runs back to dollars or the market. Or if there are price controls which are already happening world wide. Remember that once some countries opt for price control this will radically skew the global demand/supply situation elsewhere forcing all to adopt them. All of this will not occur in areas where the commodity is not a life or death demand issue, but where it is look out.

This bubble will burst but before it does a lot of people are going to be hurt or die. These commodity bubbles take the stairs up and the elevator down. Oil and Food speculation can bring the economy of the world to a severe depression a lot worse than some Wall St. mortgage bankers and hedge funds folding. Bernanke should never have dropped the rates unless it was agreed by all nations to do the same but he did and he has destroyed the dollar. This has caused the whole cycle above. He must raise interest rates to 5% prime immediately. This is the only thing that will bring the strength back to the dollar so that we see dollar euro 1:1 again. Watch what happens to oil and corn prices then.