pkamp

The Ethanol Boom's Unintended Consequences

The problem with ethanol driving up food prices is people with pulpits like Tate Dwinnell who don't know what they're talking about. It has nothing to do with supply and demand or planted acres. For every 800 bushels of corn that are traded bought or sold, 1 bushel is actually taken delivery of - meaning, the 799 others are speculators who, driven by fear, gut instinct, or jump-on-the-latest-pro... bandwagon, are controlling the price of ethanol far more than US farmers, polticians, or the big commodity meanie ADM. (By the way, it is the fuel blenders, i.e. oil and gas companies, who get most of the ethanol blending subsidy)

That's called capitalism. We could fix the price of corn at $2.30 or so, and it would be good for all the little people across Amerca buying fuel every day - but I dont' think we're going to propone regulated markets, right?

Asking the CATO Institute about the benefits of ethanol, or the reality of global warming, is akin to asking the tobacco institute about lung cancer. Is that the best 20/20 can do?

Listen again to all the politicians in the 20/20 report (except for Hilary, but listen closely to Evan Bayh). The reason they're behind it is that it is good for the US. Before politicians backed it, it was doing great things for rural areas across the midwest - revitalizing towns, creating new strong ag markets, burning cleaner, creating local jobs and local investment opportunities, and yes, reducing imports. Its now wonder all the poticians like it, but they are simply jumping on the bandwagon.

By the end of 2007, the amount of ethanol made in the US will approach gasoline made from oil imports from Iraq and Kuwait. And the oil companies will soon be shifting that production to the rapidly growing Chinese and Indian markets, because it will make more sense - they're buying lots of cars over in Asia.
So ethanol will never replace gasoline - but its a matter of doing the right things, one at a time, so that we can be more energy reliant. For now, corn makes perfectly good sense, and will always be cost and energy effective with all the good developments being made in the industry. The industry itself is closely following the use of corn and its impact on feed corn and export markets (both of which went up last year, in ethanol's biggest year ever!) and growth of ethanol production using other feedstocks. It's because our farmers and ethanol producers are good, smart, resourceful people and they are increasing the yields while lowering use of fertilizers and taking good measures on soil erosion.

At the current price, feeding cows whole corn costs about six cents a pound. So if "a farmer" wants to feed his livestock french fries, which would cost around eight dollars a pound, he's not too bright. What he should be doing is feeding his cows DDGS (a high protein byproduct of ethanol production), which when blended into animal feed, can lower feed cost per animal. This is the truth, and livestock producers with a little bit of vision are warmly embracing this.

Sounds like Tate Dwinnell might be pretty attached to his tequilla (I like it too!), but this article and the 20/20 piece are complete rubbish.