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Thread: law of unintended consequences strikes again

  1. #1
    Banned Melonie's Avatar
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    Default law of unintended consequences strikes again

    If you step past the headline and read the meat of the article, the following is noteworthy ...

    (snip)" Corn is up 16 percent from a year ago on concern about the drought and increased demand from investors seeking better returns than stocks and bonds. The biggest boost for corn in the U.S. is coming from ethanol, which the government mandated be used as a gasoline additive.

    Ethanol Demand

    Ethanol demand will boost U.S. corn use 34 percent to 2.15 billion bushels in the year that begins Sept. 1, up from a record 1.6 billion this year and a 62 percent jump from 2005, the U.S. Department of Agriculture estimates.

    U.S. ethanol production jumped 21 percent to 12.1 million gallons a day in April, according to the Energy Department. Ethanol makers are earning $6 of profit on every bushel of corn they process, according to data compiled by Bloomberg. "(snip)

    What the article doesn't specifically say is that other products which use corn as a raw material are already faced with a 16% increase in corn costs and will attempt to raise prices accordingly. In the case of corn, this will translate into significant price increases for beef (which are usually corn fed), beer / whiskey (which are usually distilled from corn), and lots of other products besides corn flakes ! This is likely to be particularly painful to 'Joe Sixpack' , whose steady diet of beef and beer is about to become notably more expensive !

  2. #2
    Yekhefah
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    Default Re: law of unintended consequences strikes again

    Anybody remember the X-Files movie from the late 1990's? Not the show, the movie. The plot was pretty complicated and built on lots of conspiracy theories, but one of the conspiracies in the movie revolved around the government poisoning corn. They pointed out that corn was the center of a lot of new and developing technologies, and said it would soon be in nearly everything. At the time it was a paranoid movie plot. Now it looks interesting.

    (But no, I'm not really afraid of the "black oil" at this point.)

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