Burning Food

[Rambo]

It's about time someone with ink realizes we can't burn food without the cost of food going up. It really upsets me the government is behind this instead of being behind developing new power plants, refineries and making a few caribou move a couple of miles.


Ethanol: Powering the Meat and Poultry Price Rise US - The soaring meat and poultry prices are being fueled by the US ethanol policy drive, says the preliminary results of a recent analysis.



Economist Tom Elam, Ph.D., president of Farm Econ, says "You cannot use the combined grain crops of Australia and Indonesia for U.S. fuel and not have an impact on corn, soybean and food prices". He expects food price inflation to rise five or six percent in 2009.


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"You cannot use the combined grain crops of Australia and Indonesia for U.S. fuel and not have an impact on corn, soybean and food prices"
Economist Tom Elam, Ph.D., president of Farm Econ.
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Elam said that he estimates the cumulative costs to the food industry of the renewable fuel program will be about $100 billion from 2005-2010.
The program mandates minimum ethanol production and provides tax incentives for ethanol use.

As part of his analysis, Elam compared what would have happened without the federal biofuels program with what has happened. According to his findings, farm level corn prices in 2008 would have averaged about
$2.77 per bushel without the program. Ethanol tax credits have added
$1.33 per bushel, and may drive corn more than $5 a bushel in 2009.

Without the biofuels program, Elam estimates that 2008 ethanol production would have been 4.5 billion gallons, but the program has added at least 4.2 billion gallons. Ethanol would have been $1.69 a gallon, but increased demand for corn and higher corn prices are driving ethanol prices up and they now are 51 cents a gallon higher than they would have been without the program.

Approximately 76 million acres of corn would have been harvested in 2007, but the program added 10.5 million acres.

Elam noted that as a result of the program this year's costs to the broiler industry are up $3.4 billion; turkey input costs are up $646 million; swine input costs are up $2.9 billion; cattle input costs are up $2.24 billion; and dairy producer input costs are up $2.7 billion.
Translated into a cost per animal, Elam estimated the costs at 53 cents per chicken; $3.40 per turkey; $38 per hog and $117.50 per fed beef animal.

Elam offered the preview of his soon-to-be-released study at the Annual Meat Conference, March 9-11, 2008, in Nashville, Tenn.

 

[SMN Herf]

but increased demand for corn and higher corn prices are driving ethanol prices up and they now are 51 cents a gallon higher than they would have been without the program.

Any economist that claims that the cost of corn is driving up the cost of ethanol doesn't know what he is talking about. What about the price of oil and the price of gasoline and its effects on everything.

Apparently this guy will do any study you want as long as you pay him his fees. At those rates, I would too I guess.

Check his website and fees. Look at his client list.

Here is his link: http://farmecon.com/default.aspx


If corn was 2.77 you couldn't build corn burning stoves fast enough to keep up with the demand. From an energy output basis corn could breakeeven in a corn burning stove at $7.00/bu.

I am sick and tired of these university types who do these studies and pretend that this whole ethanol business is done in a vacuum. How many acres of corn would be planted with todays prices of wheat, beans, oilcrops, rice and other commodities at these levels. On top of that consider $600 ton fertilizer amd the answer would be very little.

On tope of that, take about 8 billion gallons of ethanol off the gas market and see how much that adds to the cost of a gas!

More later, but gotta see about the cattle.

Brian

 

[Rambo]

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The ethanol hoax
Walter E. Williams, Ph.D., is the John M. Olin Distinguished Professor of Economics at George Mason University in Fairfax, Va.


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Posted: March 12, 2008
1:00 am Eastern

© 2008

One of the many mandates of the Energy Policy Act of 2005 calls for oil companies to increase the amount of ethanol mixed with gasoline. President Bush said, during his 2006 State of the Union address, "America is addicted to oil, which is often imported from unstable parts of the world." Let's look at some of the "wonders" of ethanol as a replacement for gasoline.

Ethanol contains water that distillation cannot remove. As such, it can cause major damage to automobile engines not specifically designed to burn ethanol. The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail car or barge. These shipping methods are far more expensive than pipelines.

Ethanol is 20 to 30 percent less efficient than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That's enough corn to feed one person for a year. Plus, it takes more than one gallon of fossil fuel – oil and natural gas – to produce one gallon of ethanol. After all, corn must be grown, fertilized, harvested and trucked to ethanol producers – all of which are fuel-using activities. And, it takes 1,700 gallons of water to produce one gallon of ethanol. On top of all this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by 10 or 12 percent.

Ethanol is so costly that it wouldn't make it in a free market. That's why Congress has enacted major ethanol subsidies, about $1.05 to $1.38 a gallon, which is no less than a tax on consumers. In fact, there's a double tax – one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of $9.5 billion in 2005 alone.

There's something else wrong with this picture. If Congress and President Bush say we need less reliance on oil and greater use of renewable fuels, then why would Congress impose a stiff tariff, 54 cents a gallon, on ethanol from Brazil? Brazilian ethanol, by the way, is produced from sugar cane and is far more energy efficient, cleaner and cheaper to produce.

Ethanol production has driven up the prices of corn-fed livestock, such as beef, chicken and dairy products, and products made from corn, such as cereals. As a result of higher demand for corn, other grain prices, such as soybean and wheat, have risen dramatically. The fact that the U.S. is the world's largest grain producer and exporter means that the ethanol-induced higher grain prices will have a worldwide impact on food prices.

It's easy to understand how the public, looking for cheaper gasoline, can be taken in by the call for increased ethanol usage. But politicians, corn farmers and ethanol producers know they are running a cruel hoax on the American consumer. They are in it for the money. The top leader in the ethanol hoax is Archer Daniels Midland, the country's largest producer of ethanol. Ethanol producers and the farm lobby have pressured farm-state congressmen into believing that it would be political suicide if they didn't support subsidized ethanol production. That's the stick. Campaign contributions play the role of the carrot.

The ethanol hoax is a good example of a problem economists refer to as narrow, well-defined benefits versus widely dispersed costs. It pays the ethanol lobby to organize and collect money to grease the palms of politicians willing to do their bidding because there's a large benefit for them – higher wages and profits. The millions of gasoline consumers, who fund the benefits through higher fuel and food prices, as well as taxes, are relatively uninformed and have little clout. After all, who do you think a politician will invite into his congressional or White House office to have a heart-to-heart – you or an Archer Daniels Midlands executive?

 

[Rambo]

If the goverment would spend their time promoting US production and exploration of oil, coal, and nuclear we wouldn't have to burn food for fuel. There are environmentaly safe ways of energy production. There have been riots in Mexico because of the high cost of food. Our government will just raise our taxes and hand out more food stamps.

 

[John SD]

I posted this same article by Dr Williams on the NAT forum page. Ya'all could surf over there and check out that discussion. I have great respect for Dr Williams as an economist but he is not an expert on ethanol production.

IMO, I believe some of Dr Williams stats are outdated or just plain not accurate. 1700 gallons of water to make a gallon of ethanol? That seemed pretty wild to me! :shock:

 

[Denny]

I bet ethanol will be profitable when gas is $4 or $5 a gallon.We should'nt have long to wait and see..

 

[Richard Doolittle]

I bet ethanol will be profitable when gas is $4 or $5 a gallon.We should'nt have long to wait and see..

You're probably right Denny, but it's going to reach a point where people will actually change habits and reduce demand rather than just complain eventually.

 

[George]

I know most of you probably don't take "Successful Farming " but they had a great article about three months ago about ethanol.

One of the major oil companies was trying to prove we were making a bad situation worse with burning ethanol and as such ran side by side test to prove we were getting worse gas milage with ethanol.

In side by side test that used a 10% blend ( currently the level required by law in most areas ) and showed a 1% reduction in milage.

Then they ran a 20% blend and showed equal milage on each. :?

Then they ran a 30% blend and got 15% better milage on the blend than on stright gas!!!!

They went to a 40% blend and got 3% worse milage than the stright gas. :???:

Several "experts " claimed these could not be right as ethanol has fewer BTUs than gas but the test were repeated with nearly identical results so some more "experts" agreed there were fewer BTUs but said the ethanol has more oxeygen in it thus allowing a more complete burn of the gas, fewer emisions and higher milage. Now several congressmen from grain producing states are trying to change the law that states 10% is the maximum allowed to be sold unless you go to 85%.

This is a topic on agphd.com on a regular basis.

 

[Doug Thorson]

IMO, I believe some of Dr Williams stats are outdated or just plain not accurate. 1700 gallons of water to make a gallon of ethanol? That seemed pretty wild to me!

It is actually 2200 gallons of irrigation water per gallon of ethanol but that may have been counting all the irrigation on all the corn in the US. Going through the plant it is 3 gallon of water per gallon of ethanol.

 

[John SD]

George, I've heard that from many sources, that E30 is the "ideal" fuel mix for most non-FF vehicles. I run about E50 sometimes in my old carb vehicles after the engine is warmed up.

I try to get the fuel back to E30 or less before the next cold start because excessive ethanol makes the vehicle very cold blooded. In my experience too much ethanol kills power and drivability more than it hurts gas mileage.

 

[Anonymous]

I bet ethanol will be profitable when gas is $4 or $5 a gallon.We should'nt have long to wait and see..

You're probably right Denny, but it's going to reach a point where people will actually change habits and reduce demand rather than just complain eventually.

I always wonder that if we could get our ethanol capabilities to the point where we don't have to rely so heavily on foreign oil that $4 or $5 a gallon might not be cheaper than the Trillions $ we now spend as taxpayers in the mideast.... :???:

One of the things I continually think we are missing the boat on is coal gasification and coal energy development... I have seen several studies that indicate just the states of Wyo., Montana, and North Dakota have enough coal to supply all the energy in the nation for 600-1000 years- even taking into account the rising population and energy needs.....

 

[Anonymous]

Coincidentally- I just received this e-mail article from moneynews.com....

Publishers Corner
with Christopher Ruddy
Moneynews.com


Declare War on Oil

Imagine if President Bush, after 9/11, simply declared war on oil and put the whole nation behind ending our crippling dependence on it.

Imagine if we had spent the money we allocated to the war in Iraq toward eliminating the oil addiction. The tab for the Iraq war hovers around the $1 trillion mark and grows at a clip of at least $12 billion a month. The Congressional Budget Office projects that the cost through 2017, including hidden costs such as veterans' benefits, could total $2.4 trillion.

There is little question that America is defending its interests in the Middle East largely because of oil. In his recent memoir "The Age of Turbulence: Adventures in a New World," former Federal Reserve Chairman Alan Greenspan wrote: "I'm saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil."

Declaring war on oil should be — literally — a war, giving the president and Congress emergency powers to mobilize the nation as never before.

I am not talking about platitudes, which we are once again hearing from presidential candidates.

I remember watching Jimmy Carter's 1977 televised speech in which he said dealing with America's oil dependency as "the moral equivalent of war."

In the years since, every president and presidential candidate has repeated the call to lessen America's dependence on foreign oil. Yet little has been done.

Today the crisis is worse than ever as oil soars over $100 a barrel.

Texas oil billionaire T. Boone Pickens recently appeared on CNBC's "Squawk Box." Pickens painted a dire picture: The U.S. is paying foreigners one-half trillion dollars a year — and some of those nations are our enemies.

At current rates, America is set to spend $5 trillion over the next 10 years to buy foreign oil, Pickens said, adding "That's more than $1 billion a day."

And he's right; the beneficiaries of this wealth transfer are often the "bad guys" — Russia, Iran, and Venezuela.

The numbers show our dependency. Currently, about 70 percent of U.S. electricity generation comes from the burning of fossil fuels, with nuclear power accounting for about 20 percent, hydroelectric 5.6 percent, and all other sources only about 2.5 percent.

We need to declare war on oil.

Here's how such a "war" might work. The president and his administration would have emergency powers to develop, design, create, and implement alternative energy sources — just like the president can do during a full blown war. And since this would be a war, the trial lawyers and environmental extremists wouldn't be allowed to bring millions of dollars of time-consuming law suits to stop the implementation of these energy sources.

Here's just some of the areas the U.S. could focus on:

— Nuclear energy. Its increased use could dramatically lower America's dependence on oil. France gets about 75 percent of its electricity from nuclear power, according to the latest statistics. As of June 2007, the production cost of nuclear power stood at 1.72 cents per kilowatt-hour — compared to 9.63 cents for petroleum.

It's environmentally friendly and we first led the world in this technology. Yet no new nuclear power plants have come on line in the U.S. since February 1996.

— Geothermal energy. You may not know this, but Iceland gets 99 percent of its electricity from geothermal means.

Drill deep into the earth and you get heat. Pour water down the hole and it vaporizes to steam. Steam can turn turbines to create electricity. Advocates say that a fully developed geothermal energy program in the U.S. could provide all American energy needs 2,000 times over.

Geothermal plants already provide thousands of megawatts of electricity to Northern California and Nevada.

— Wind power. This natural form of energy also is feasible. American wind energy installations currently produce enough electricity on a typical day to power the equivalent of more than 2.5 million homes, but the potential exists for far more wind power production. Pickens says whole sections of the Midwest could harvest enormous energy from such wind farms.

— Coal liquification. This process converts coal into petroleum. Coal liquification has been used for some time, but it's costly. Already, the U.S. Air Force is increasingly using synthetic fuels made of coal derivatives, which are far cheaper than jet fuel.

Our government could back developing new technologies to make this work on a mass scale. The U.S. has an abundance of coal. U.S. recoverable reserves are estimated at 275 billion tons, the most in the world.

We need to work at every level to end our oil dependency. Congress needs to pass tax and other incentives for companies to research and develop new energy sources. At the same time, Congress has to incentivize consumers to help create the market for alternative energy.

Make no mistake — if we waged this war, we all would win.