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Wednesday, April 30, 2008


How Much Does Ethanol Cost Us

Lately there’s been some discussion in the comments regarding just how much the corn diverted to ethanol production has affected the world wide food shortage.  Aside from ethanol we’ve seen rising demand as well as crop failures in various parts of the world because of drought and global warming

cooling.  Also rising populations and rising affluence in the poorer countries is leading to a very significant rise in demand.  (And that’s a good thing in my opinion.)

Our discussions have always been unsatisfactory because nobody’s come up with any hard data one the relative effect of these various factors.  I stumbled upon some data from The Economist this morning.

his year the overall decline in stockpiles of all cereals will be about 53m tonnes—a very rough indication of by how much demand is outstripping supply. The increase in the amount of American maize going just to ethanol is about 30m tonnes. In other words, the demands of America’s ethanol programme alone account for over half the world’s unmet need for cereals. Without that programme, food prices would not be rising anything like as quickly as they have been. According to the World Bank, the grain needed to fill up an SUV would feed a person for a year.

America’s ethanol programme is a product of government subsidies. There are more than 200 different kinds, as well as a 54 cents-a-gallon tariff on imported ethanol. That keeps out greener Brazilian ethanol, which is made from sugar rather than maize. Federal subsidies alone cost $7 billion a year (equal to around $1.90 a gallon).

So America’s ethanol program is directly responsible for the lost of 60% of the worlds stockpiles.  Add to that the ethanol programs in Europe and I think you could say that ethanol was the driving force in the shortage of food that we’ve recently seen.

Now of course the other side could say that droughts and other crop failures reduced production by an amount equal or greater than the 30m tonnes that the US ethanol program consumed.  And that’s a fair point, but I think you have to consider that you’ll never have a perfect growing season world wide.

The other think that’s remarkable in this article is just how much the ethanol subisdy is costing us.  When we fill up with a gallon of ethanol it’s costing the taxpayer (you and me) $1.90 in addition to the $3.40 we’re paying the friendly guy inside the pump.  Plus we’re paying in higher food prices as well.

I think we gotta apply the brakes to this ethanol thing until the world’s farmers can catch up with increased production.  I’m not saying to quit producing it, but let’s cut down on the mandates.

Does this tick you off? Click here to email your elected representatives right here on Say Anything, or comment below.

Comments

Avatar for patriotic

Using livestock feed for fuel - What a concept!!! Junk science run amuk!!! Gives a new meaning to “Save the planet.”

patriotic on April 30, 2008 at 06:58 am
Avatar for Biofuelsimon

That is an interesting point. How do you feel about removing the tariff from cheap Brazilian ethanol made from sugarcane? That could help to reduce the amount of corn used to make ethanol and might help lower prices at the pumps in the US. Or how about more efficeint autos, something small and Japanese perhaps?

Biofuelsimon on April 30, 2008 at 07:00 am

I’m a free trade and free choice kinda guy.  I think you can probably guess what my stand would be.

Since in my opinion government action continues to make the fuel situation worse it’s an easy call.


1% of Americans pay 40% of the income tax.
5% of Americans pay 60% of the income tax.
10% of Americans pay 70% of the income tax.


The Whistler's signature
The Whistler on April 30, 2008 at 07:37 am
Avatar for patriotic

Removing the tariff might help in the short run.  100% ethanol fuel derived from sugar cane is used in Brazil to power cars and is more efficiently produced.  In the long run: Open up ANWR and offshore areas to drilling and expand nuclear energy - Both of which can be done without any consequential “damage” to the environment.  Small and more efficient autos are a tradeoff.  The lighter materials used to garner fuel efficiency (with current technology) will only increase the death toll on our highways.

patriotic on April 30, 2008 at 07:40 am

Ethanol is costing me a little bit of money in the form of higher prices.

Many around the world are paying the ultimate price: their lives.

Thank you, socialists! Both in America and in Europe, you guys did a splendid job in short order. People in the world were still dying of starvation and then you guys, ever insightful and full of wisdom, demanded that we use food as fuel. 

Well done! You socialists always manage to find a way to kill the masses.

Another one of your crowning achievements was banning DDT. Millions upon millions of Africans subsequently died of mosquito borne malaria after that action. It’s still going on to this day!

Socialists: helping the “working class” by raising the cost.
Looking out for the “little guy” by killing him.
And calling themselves “reality based” while doing it.

likwidshoe on April 30, 2008 at 07:51 am

I agree with ending the tariffs & subsidies, but the market should be allowed to work out the rest.

Imagine if you had said:

I think we gotta apply the brakes to this ethanol oil thing until the world’s farmers oil producers can catch up with increased production.

 


This is the part I agree with - back down the incentive, but slowly enough to allow equilibrium:

I’m not saying to quit producing it, but let’s cut down on the mandates.


Farmers were in the position of working hard for little pay when prices were low and were given only enough aid to keep them in business.  Grain prices have finally increased, only to have fertilizer & fuel costs eat into the profit.  I don’t think that now is a good time to pull the rug out from under America’s farmers.  A price collapse would do nothing to increase production.

Don’t forget that the production costs of grain have increased dramatically - grain is only as likely to return to prices from 3 years ago as fuels are - something that’s not very likely.

electnixon on April 30, 2008 at 08:01 am

Right a collapse in the market it going to cause huge problems as well. 

Agriculture will catch up, but it takes some time.


1% of Americans pay 40% of the income tax.
5% of Americans pay 60% of the income tax.
10% of Americans pay 70% of the income tax.


The Whistler's signature
The Whistler on April 30, 2008 at 08:09 am

This nation will not drill nor allow new refineries thanks to the Democrats.

But we will raise taxes,
subsidize the failing ethanol program,
and divert the basic food staple of corn into our gas tanks.

This plan of action came from the “reality based”.

Ethanol is now a government program. It will now be nearly impossible to kill, so remember to thank the socialists the world over as prices soar and people starve. This one is their baby.

likwidshoe on April 30, 2008 at 08:11 am

electnixon, your example doesn’t work. In your example, you’re comparing one product (oil energy) to two products (energy via ethanol and food).

I think we gotta apply the brakes to this ethanol (energy) oil thing until the world’s farmers (energy via ethanol and food) oil producers can catch up with increased production.

Ethanol isn’t a market, it’s a government program.

likwidshoe on April 30, 2008 at 08:15 am
Avatar for Joe

Well our failed politically driven energy policy has finally caught up with us. We’ve shut down a significant portion of our domestic oil and gas, made it impossible to build new nuclear plants and legislated our food stores into ethanol which has a negative impact on both fuel and food costs. We wax green poetry while third world nations starve! Let’s tax BIG OIL, they can afford it (Clinton) and drive our remaining domestic oil business overseas.

Joe on April 30, 2008 at 08:54 am

Toot, your position is supported by many sources, (JavaScript must be enabled to view this email address)

Global production of cereals will reach a record 2.095 billion tons in 2007, but foodstuff reserves continue in crisis due to the demand for ethanol production

and (JavaScript must be enabled to view this email address)

Grain reserves worldwide have fallen to their lowest level in 30 years. Population continues to mushroom. Bumper harvests this year probably will meet demand, but only barely.

are two of many reports essentially saying the same thing.


One of the most important talents for success in politics is the ability to make utter nonsense sound not only plausible but inspiring. Barack Obama has that talent. We will be lucky if we escape the catastrophes into which other countries have been led by leaders with that same charismatic talent.
-Thomas Sowell

docdave on April 30, 2008 at 09:23 am

Ethanol is now a government program. It will now be nearly impossible to kill

No truer words have evr been spoken…

golfmann on April 30, 2008 at 02:46 pm

I wish you had an edit for these posts! smile

golfmann on April 30, 2008 at 02:50 pm
Avatar for Woody

How Ethanol keeps Oil Prices Low

http://blogs.automotive.com/6241483/opinion/how-ethanol-keeps-oil-prices-low/index.html


the U.S. consumed more than 1.9 billion gallons of ethanol since April 4 and that is equivalent to about 46 million barrels of oil. They say that this is evidence that the oil industry would have had to reduce gasoline inventories and import barrels to compensate. With all this and more taken into account, they say, without ethanol gas prices could be more than 25 percent higher than they are today. And the price of diesel, which is already higher than gasoline, would be an additional 16 percent higher.

So what hurts the pocketbook worse the higher food prices we have now or the higher fuel prices we would have without ethanol

Woody on April 30, 2008 at 03:15 pm

So what hurts the pocketbook worse the higher food prices we have now or the higher fuel prices we would have without ethanol

Let’s drill and build refineries instead.

And what hurts worse? Death by starvation.

likwidshoe on April 30, 2008 at 03:25 pm

I don’t know but I went out alone last weekend drank plenty of Ethanol beverages and managed to blow two hundred dollars. I think Sally the dwarf bar tender robbed me that little whore.

WETBACK on April 30, 2008 at 03:51 pm
Avatar for RebTex

A factor that is easily over-looked is that ethanol/methanol has only about 1/2 the BTU value of gasoline.
Boiled down to layman terms, it won’t get the mileage that pure gasoline can.
Factor in the reduced mileage along with the other losses & ethanol/methanol is not a very efficient fuel.

RebTex on April 30, 2008 at 07:28 pm

How Ethanol keeps Oil Prices Low

So it’s just my imagination that the price of gas is higher with each fill-up, or do you live in some other universe?


One of the most important talents for success in politics is the ability to make utter nonsense sound not only plausible but inspiring. Barack Obama has that talent. We will be lucky if we escape the catastrophes into which other countries have been led by leaders with that same charismatic talent.
-Thomas Sowell

docdave on April 30, 2008 at 07:49 pm

the U.S. consumed more than 1.9 billion gallons of ethanol since April 4

That’s funny according to the Renewable Fuels the 2007 capacity was 7.8 Billion gallons not 26.67 Billion gallons (26 days of 1.9 billion gallons annualized.) 

7.8 billion gallons is 21.4 million gallons a day.  I’ve been reading that Ethanol only creates 1.67 times the amount of energy put in.  So really you’d have to cut that down to 12.8 million gallons a day net. 

On the other hand the worldwide oil industry produces about 3.5 billion gallons a day.  (80 million barrels)

So I’m not thinking that ethanol is really saving us that much on the price, not as much as it’s costing us.  I think more likely some poor guy without enough food would have gone without energy as well.


1% of Americans pay 40% of the income tax.
5% of Americans pay 60% of the income tax.
10% of Americans pay 70% of the income tax.


The Whistler's signature
The Whistler on April 30, 2008 at 08:27 pm

All those ethanol advocates should be interested in the perpetual motion machines I have for sale.


No Free Lunch
25i20w9.jpg

Kevin on May 1, 2008 at 09:06 am
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