Exploding the Myth - Corn Prices Not Rising Because Of Ethanol

[percussivemadness]

Brilliant blog by Ally Klimkoski, a must read:

"I spoke with Jim Martin (no relation to Marshall) who is on the Federal Technical Advisory Committee for Biomass Research and Development, and he confirmed that blaming it all on ethanol neglects a number of other factors that don't always fit into a 30 second analysis.

According to Jim Martin, in 2007 the USDA reported that the US produced over 13 billion bushels of corn, the biggest corn crop ever.

"That was 2.5 billion bushels more than in 2006. In the same year, 2007, demand for corn to make ethanol went up by a billion bushels, increasing supply over and above ethanol demand, by about a billion and a half more bushels in the US than the year before. Normally that would create a surplus and prices would have fallen. They did fall for a while in late 2007, but have bounced right back up..."


http://www.bidforgreen.com/bid/guestblog.php

[aint_no_life_nowhere]

1. While I don't like the idea of corn used to make fuel

because it's inefficient compared to other types of crops, I think there might be truth to the fact that corn price hikes are not entirely due to its use in making ethanol. I think runaway speculation has invaded the food industry as well as gasoline, because there aren't that many other places to stick money nowadays, after the dot.com and house-flipping bubbles burst.

[percussivemadness]

2. I would agree

I think the blog however really does make some very valid points to help shoot down your average relug neanderthal. :)

Peace

[Exultant Democracy]

3. Ethanol is a boondoggle and it is fueling speculation. Oil prices are part of the story too but

the speculation is a real factor.

[percussivemadness]

6. Fascinating book called Energy Victory

which deals in this matter. Fundamentally, the author argues, that the reason we are seeing such speculation is that is is manipulated by the Saudis. Why now? Well, we all know Bush`s Saudi connection, however it goes deeper than that. When Bush removed Saddam at the request of the Saudi`s, it removed what was a paradoxical stabilising force in the middle East. With Saddam removed, the Saudi`s didn`t need American protection anymore, so they have driven up oil prices in an attempt to attain global domination of assets. The reason the Saudi`s are the number 1 sponsor of terrorism, is that should the world`s second largest reserves ever hit the market (that would be Iraq), the price would fall dramatically.

So the Saudi`s pay terrorists to blow up oil refineries and pipe lines in Iraq (and sometimes US troops get in the way, I guess this is what Bush would refer to as collateral damage), thus keeping supplies controlled and prices high. Then through soverign nation funds, they buy up business for pennies on the dollar who cannot survive as a result of high gas prices.

This is not a US problem, but a global problem. Everyone argues that Bush went into Iraq for oil, no he went into Iraq for Saudi oil...

Peace

[Exultant Democracy]

9. It's the money. Just follow the money.

[Kaleko]

13. Fascinating take on these moves in the global chess game

I'll have to look more deeply into it. Thanks for posting!

[Tashca]

4. Thank you for posting.

This does a good job of laying out the pressures on the corn market as we look ahead. As the ethanol market develops it makes the most sense to use corn first because of it's being so plentiful. I do believe as this evolves we will find better crops to use in these same production plants.
The article points out that the corn being used is mostly putting pressure on the U.S. export market.
I think something that really needs to be talked about is.....if we are not going to feed the world as once proposed by Earl Butz......then are we going to stay the hell out of other countries agricultural systems? Are we going to help them develop and expand their own agriculture? We seem to have helped destroy some agricultural systems in other countries by dumping large amount of subsidized grain on them. No way could those farmers compete and they are now out of business leaving those counties reliant on imports.
We need a new agricultural policy as it relates to other countries.....

[percussivemadness]

5. the lumping together of Ethanol and Biofuels is really annoying

However, you are welcome...

Peace

[lildreamer316]

7. Bookmarked. You do know this is a MAJOR attack talking point right now against Al Gore?

Not that any serious people are giving it any traction, mainly because there's not much press to be gained attacking him in this contentious primary season, but a plethora of rw bloggers have been hounding this meme to absolute death. I was worried about it eventually becoming an MSM phenom; but so far they have other fish to fry.
Thanks for the post. Def. kept for future reference!

[percussivemadness]

10. I think it`s a major attack against the Alternative Fuel movement

as much as Al Gore. As someone said a few posts earlier, follow the money. There is a company call Amyris, who have produced cellulose ethanol, removing the corrosive element and allowing it to be distributed through current gas station pumps. They also claim that the energy output is almost as good as gas. This could have huge ramifications for everyone.

American Green Holdings (people behind BFG)are developing new bio fuels to aid transportation. They also have a product called the ethanol reformer, which is being lauded by the Brazilians.They also have a plan to use carbon credits to revitalize native plants and regions.

There is a bi-partisan bill in congress that will mandate that all new cars sold in America be flex fuel.

What I find fascinating, is that this is American driven and I can see a point in a few years time that America dominates the world in alternative fuel technology, thus providing jobs that are outside of the service sector and a return to manufacturing industries, something that is desperately needed.

If Amyris (and there are a few other companies close), combined with the flex fuel bill can basically destroy the OPEC cartel and help bring a modicum of sense to transport, this will crash the price of diesel, which in turn maintains the delivery infrastructure of the USA. With ever increasing availability of bio diesel, we could find our selves in a few years not only being totally independent of ME oil, but also driving environmentally friendly vehicles.

Amazing times...

Peace

[lildreamer316]

15. Oh, wouldn't that be great!!

Sigh.
<best picard voice> "Make it so!"
Thanks for the info. I'll keep an eye out for that Amyris and AMG. REALLY interesting to follow what OPEC will do about this if they are percieving it as a real threat. Hmmm.

[percussivemadness]

17. Yes captain

for more info:

Amyris can be found at http://www.amyrisbiotech.com/ and American Green Holdings at www.americangreenholdings.com

We shall make it so :)

Peace

[roamer65]

8. A lot of people have gone to corn burning furnaces.

Not only is ethanol reducing supply, a lot of people now use it as a heat source. It is still way cheaper than heating oil.

[ThoughtCriminal]

11. I think David Brin had a very good blog post about ethanol

A bit long, but worth reading if interested in the topic.
http://davidbrin.blogspot.com/2008/05/corn-ethanol-farms-food-and-logic-of.html

[percussivemadness]

12. good blog, ty for that

peace

[Kaleko]

14. Good article. K & R

[cascadiance]

16. Maybe we could also stop subsidizing export of HFCS *LACED* products too!

Since we are subsidizing corn-based (and likely diabetes causing) pseudo-sugar sweetened products such as soft drinks around the world, that probably also inflates the price of corn by taking more corn out of the global crop as well. And we the taxpayer wind up subsidizing that artificial lower price and the WTO is subservient to our companies' wishes when companies like Mexico try to fight this with tariffs placed on HEALTHIER products!

http://findarticles.com/p/articles/mi_m0EUY/is_11_12/ai_n16110567

I'd take cane sugar sweetened cola ANY DAY over HFCS crap!