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Thread: ah the unending consequences of US Ethanol Subsidies ...

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    Default ah the unending consequences of US Ethanol Subsidies ...

    besides the billions of tax dollars being thrown at the US ethanol industry in subsidies, and besides the fact that US corn base ethanol consumes almost as much in the way of oil based energy for tractor fuel, fertilizer etc. that the ethanol produced actually contains, it seems that there is yet another wonderful side effect of the US gov'ts ethanol program !

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    Default Re: ah the unending consequences of US Ethanol Subsidies ...

    Yep, it's affecting food suplpy and prices, not to mention the fact that your gas mileage is not as good with it, causing you to use more, thus paying for more, thus wiping out any financial benefit.

    The environmental "benefit" is not only wiped out by what Melonie has mentioned, but sice you are burning it off at a faster pace than standard oil, it doesn't really seem to be any better in terms of pollution and the environment.

    http://www.cattlenetwork.com/content...ntentid=101313

    From the article:
    "...Some economists caution that ethanol demand could pressure the corn supply, driving up corn prices because of food-fuel competition. Ethanol demand has already increased chicken prices by six cents a pound, according to the National Chicken Council. The price of corn, 75% of the cost of ethanol production, has doubled to nearly $4 a bushel over the past six months. Almost half of the country’s corn harvest could go toward the fuel with the addition of 79 planned ethanol plants in 2008, according to the Earth Policy Institute.

    Ethanol costs between $1.45 and $1.65 a gallon to produce and is less efficient than gasoline. A car running on E85 fuel - reformulated gasoline that is about 85% ethanol - gets a third less gas mileage than one running on gasoline. The federal government supports ethanol with tax subsidies worth about 51 cents a gallon. Only about 2.5% of cars are considered “flex-fuel,“ or capable of running on gasoline or ethanol, and even fewer do because less than 1% of the nation’s gas stations offer E85.

    Environmentalists are cool to corn-based ethanol because it requires so much water, energy and land and produces only slightly more energy than it consumes...."






    (just click to donate FREE food to those in need...REALLY!)

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    Default Re: ah the unending consequences of US Ethanol Subsidies ...

    There are technologies were 1 unit of diesel produces 7 units of ethanol. Interesting enough, this is being done with bio-engineered bacteria. So the whole "it costs more to harvest ethanol than to use" is starting to fade out.

    I have done a lot of highway driving through ethanol states and I haven't seen my mileage go down. (And I have a car computer that figures it out for me right on the dashboard too.)

    I can believe it would put a crimp in the food production value chain... at least at the beginning of it. But it may yank some expenses out in the middle or near the end balancing it all out. No one knows yet.

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    Default Re: ah the unending consequences of US Ethanol Subsidies ...

    Deo, the reason that this subject hasn't drawn much financial scrutiny until now is that, at the time the US gov'ts new fuel additive laws which 'created' the US ethanol subsidized industry was enacted about a year ago, there was a bumper crop of previous year's corn in storage and very few refineries available to reduce the amount of ethanol 'required' to meet the fuel additive mandate. Thus the supply of corn was plentiful, the price was reasonable, and the actual demand for corn as feedstock to existing refineries was meetable with the stored corn surplus. The problem is that during the intervening year the remaining corn surplus has all been consumed, additional refinery capacity is coming on line requiring even more corn as feedstock ... and those refineries must basically bid whatever price is necessary in order to obtain the corn they need to meet the ethanol fuel additive mandate at whatever price the ethanol winds up having to be sold for in order to turn a subsidized profit.

    One result of the above is that the price of corn has been bid up to a level that is 3 times what it was a year ago. Another result is that the former US corn surplus that was available for export as food to countries like Mexico a year ago will now be 100% consumed within the USA as ethanol feedstock. This leaves foreign countries who typically imported cheap US corn with not only a price problem but also with a food supply problem at any price.

    Also guaranteed is the fact that the number of additional ethanol refineries that are scheduled to come online within the next year in order to increase US ethanol production capability enough to start meeting the ethanol demand for E90 nationwide ( = enough ethanol to equal 10% of all the gallons of gasoline consumed in America) cannot be met by farmers maintaining the same allocation of farmland that they have typically done in the past. The high price of corn and the increased refinery demand will induce farmers to devote additional acreage to corn at the expense of soybeans, wheat and other crops. As a result the available supply of this year's soybeans, wheat and other crops will be less than last year, leading to rising prices and a cutoff of exports to countries like Mexico until American demand has first been satisfied. This will leave foreign countries that typically imported cheap American soybeans, wheat etc. with a supply problem as well as a price problem for essentially all 'affordable alternatives' to corn - they just don't know it yet.

    I won't even get into the issue of price increases for corn and other crops causing downstream effects in the beef, poultry, pork industry as their cost of livestock feed doubles and triples. These are the companies that will feel the crimp in the food production value chain ... because unlike farmers with the option of devoting their acreage to corn vs wheat vs soybeans etc. with a guaranteed market and guaranteed subsidies where corn is concerned, the beef, poultry and pork producers have no such guaranteed market or guaranteed subsidies. Thus it is likely that the meat producers will anticipate that rising prices will result in reduced demand for their products such that they'll reduce the size of their 'herds' in order to avoid being caught in an oversupply situation that would put downward pressure on market prices for beef, poultry and pork at the same time that their production costs have risen.

    Literally, last year's ethanol fuel additive legislation has taken Tortillas out of the mouths of Mexicans and put them in American gas tanks instead.

    I guess this really isn't a problem though if your intent is to induce even more Mexicans to illegally cross the US border, apply for social welfare benefits, and allow US taxpayers to buy them all the tortillas they want at three times last year's price !

    "let them eat cake !" - Marie Antoinette

    ~

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