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It's only corn, right?...

Discussion in 'Business & Economics' started by TruthAboveAll, Jun 20, 2007.

  1. TruthAboveAll

    TruthAboveAll Active Member

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    Just some thoughts on ethanol/bio-diesel:

    - The demand for corn as a direct result of the fabricated market for ethanol has led to a 15% increase in planned corn plantings in the U.S., as of April 2007. Sounds like a good thing for corn farmers.

    - The increased planting for corn will result in a decreased planting for other crops - wheat, soybeans, oats, etc. and the inevitable higher prices for the increased scarcity.

    - Corn futures for July 2007 recently topped $4.00/bushel, surpassing U.S. Energy Department expectations. That's up from prices averaging around $1.75 in 2002.

    - Wheat prices in the same periods are $6.06, up from $2.15.
    Soybean dittos $8.27-1/2, up from $4.40.

    -The Conservation Reserve Program currently contains 27.8 million acres ostensibly for environmental purposes. Over the next three years 4.6 million acres will exit the program, nearly a 17% decrease. Possibly a good thing for us all.

    - Per USDA, "...there could be harm to the environment if land set aside for water conservation or wildlife habitat were used to grow more corn for ethanol." This is, however, exactly what their actions are moving towards.

    - Recent numbers on U.S. corn consumption: Alcohol 1.3%, Export 19%, Cereal/others 1.8%, High Fructose Corn Syrup 5%, Starch 2.5%, Sweeteners 2.2%, Ethanol 11%, Feed residual 57%, Seed 0.2%.

    - The numbers on corn consumption will be strongly affected within five years. "...about 30 percent of the corn crop will be needed for the fuel supply, according to the Government Accountability Office. Using more corn for energy production will likely exert additional upward pressure on corn prices, potentially influencing livestock feed markets and meat prices," the GAO said in a report to Congress. 11% to 30%! And that's taking into account increased land usage for increased production!

    - According to USDA statistics, future markets aside, corn prices in 2002 were $2.32 (higher than futures speculations), $2.42 in 2003, then down to $2.06 in 2004, to the lowest in 2005 at $2.00, then sky-rocketed to $3.20 in 2006. Based on this 37.5% one year increase, the $4.00 in the futures market for July 2007 might indeed be a conservative number.

    - The increased pressure on corn crops will affect the prices of nearly everything in the U.S. public food supply.

    - Since food and fuel are not used in calculating inflationary rates, the numbers presented to the public are receiving a double-whammy in the deception department.

    - The demand for ethanol/bio-diesel is not originating in market-driven usage, but from government (state and federal primarily) implemented requirements.

    - Using the bushel volume, it currently takes 30% more energy (nearly exclusively in petroleum products) than the ethanol it will produce.

    - The ethanol needed to fill a routine passenger sedan is roughly equivalent to what it would take to feed an average person for 6-7 months.

    - E85 fuel results in approximately 25% less MPG. All things considered, the environmental benefit is very questionable. The jury is still out.
    To seek and develop alternate forms of energy is positive. To incorporate ethanol and bio-diesel, and explore additional sources for them (switch grass, wood chips, etc.) is definitely a good thing. Brazil and their sugar-based ethanol industry is often cited as a model for ethanol development and use. But has anyone looked at their rain forest devastation recently, and the vast tracts of sugar cane plantations that result?

    With all this in mind, and in a global market, do we really want to proceed with this full-speed-ahead, blind rush to expanding a market that is questionable in the long run, at best? As the American people continue to have basic levels of need for dietary sustenance, do we want to find ourselves dependent on foreign countries for our food, rather than our oil?

    And our food will cost more - significantly more. Some will have the answer that it's a good argument for vegetarianism. Okay, maybe. But wait until you see what all this will do to soy products and pricing...

    Perhaps we'd do well to be careful, very careful, about what we wish for. Dependency on foreign oil? $5.00/gal gas? Sounds pretty good compared to the food alternatives. If we learned nothing else from the recent pet food and toothpaste episodes, we should have learned that.

    Sources for info/stats:
    USDA website
    CNN Money
    Southeast Farm Press
    University of Iowa
     
  2. steveox

    steveox Well-Known Member

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    If those Stubborn Democrats would just go along and drill in ANWR off shore in california we wouldnt be in this mess.If those Stubborn democrats would allow 20-50 brand new refineres we woiuldnt be paying $3 a gallon of gas!
     
  3. DrWho

    DrWho New Member

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    Then don't vote for Sen. Hillary.
     
  4. DrWho

    DrWho New Member

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    As we can see every action spawns a multitude of results. There is no way a person could keep track of all the results we would get if we started to try to manage all these factors.

    We should never try to have a person be in control of setting policy for what is grown by whom and how much is charged for it. Or for the price of anything.

    We need a system where the price of everything is determined by market forces which self-regulate up or down as needed.
     
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