Posted on 05/18/2009 1:05:42 AM PDT by red flanker
The government said last week that wholesale prices for food spiked in April — the biggest monthly jump in more than a year. Beef, pork, vegetables, fruit, eggs all rose in price. Some economists saw the increases as good news: it eased their fears of a deflationary spiral. But do American consumers, now experts in penny-pinching, have to worry about higher prices down the line?
Or do last month’s figures simply represent normal volatility, with price ups and downs essentially even for the year or even down? What factors put pressure on food costs?
(Excerpt) Read more at roomfordebate.blogs.nytimes.com ...
The author is formerly the chief economist for ConAgra Foods and indicates:
1. Reduced availability of corn: Based upon Agriculture Department estimates released on May 12, corn supplies will decline to the lowest level (relative to usage) in 14 years. This largely reflects a 35 percent increase in the use of corn for the production of ethanol over the past two years.
2. Battle for acreage: As more corn is needed to meet ethanol demand, acreage devoted to other crops, such as wheat and soybeans, is reduced, leading to higher prices for those crops as well. A hiccup in weather this summer could drive prices significantly higher for corn, wheat or soybeans.
We know how our political "representatives" in Washington nearly brought down the world economy by coercive fiscal and housing mandates. Any ethanol policy that requires government subsidies should be opposed and quashed immediately because it will ultimately raise energy AND food prices to the detriment of everyone in the US.
BS, BS, and more BS. “...a 35 percent increase in the use of corn for the production of ethanol...” means precisely nothing without giving an indication of the size of the corn crop. There has been a surplus of corn over ALL uses EVERY YEAR. Instead of reading the NYT, spend some time on the Department of Agriculture website and see what the REAL crop statistics have been for previous years, then compare that with the amount used for ethanol production (also available from that same website).
So?
Exactly why the price of corn has been at the rate that it was at EVERY YEAR.
Now that increased demand eats into, or removes surplus, the price goes up.
That is an investment no brainer, also know to options traders as “a big stack of money left on the trading floor,” and it is not by coincidence that I hold long positions in that grain.
Conversion to fuel boosts prices, period.
Agree Corn juice fuel boosts prices, period.
Since it takes 1.3 bbls of oil to make a bbl of ethanol we shouldn’t be using it in the first place. It is one big political boondoggle. Who cares about surpluses, it still drives the price of food/fertilizer and land up artificially. We may be needing those food stocks if this economy gets much worse.
Pray for America
Statement not comprehensible. What "rate" are you talking about???
"Now that increased demand eats into, or removes surplus, the price goes up. That is an investment no brainer, also know to options traders as “a big stack of money left on the trading floor,” and it is not by coincidence that I hold long positions in that grain.
MY take on it is that the increase in the price of corn is totally due to SPECULATORS (like YOU!!!), and not the production of ethanol. There has been a large surplus over all uses in every year for the last half century.
No, it doesn't "...take 1.3 bbls of oil to make a bbl of ethanol....". That meme is just as bogus as the "expensive food" one. Even production of ethanol from corn has a 1.3 ratio POSITIVE energy balance, and the largest part of the expended energy is NOT, I repeat, NOT oil. The biggest use of energy in the production of corn is that used to produce the fertilizer, and THAT comes from natural gas, and in some cases (and could be all cases) coal---of which we have plenty.
Do you really "like" being a shill for the Muslims?? Because that is precisely what the "ethanol has a negative engergy balance" propaganda is.
Don’t forget that ethanol has but .6 the BTU of gasoline.
I'm well aware of that, but that figure is "accounted for" in the calculations of the Argonne study, since the energy balance is actually calculated in BTU's.
The ConAgra guy is conflicted from the get-go, and is not to be trusted implicitly. ConAgra would complain about the price of corn if it has any price greater than zero.
For example, he talked of this “battle for acreage.” Nice theory, no supporting facts. Corn acres peaked in 2007 with a 15-million acre increase over the previous year, and in 2008, there was a decrease of about 12 million acres of corn from 2007. This year, there’s a slight decrease in intended corn acres. Why? Well, bean prices have been high, so there’s no incentive to jump off the normal bean/corn rotation - yet. If we have a very wet spring, some farmers might change intentions and end up in beans as they’re waiting for land to dry down a bit and the season gets late.
Now, allow me to emphasize the word “intended.” All the USDA has at the point of the March report is *intended* acreages. They also have only estimates of weather and yields. There’s no telling what we’re really going to have until October.
He claims that the corn carryover will be the lowest in 14 years, and then blames ethanol. He doesn’t mention increased exports.
Then the usual disclaimer is inserted: “A hiccup in weather...”
That’s the same thing EVERY year. Every commodity trader and speculator who is long is hoping for a “hiccup in the weather” along the season. For example, there’s the wet weather in some parts of the US. Or if we get a dry August over large areas of the corn belt, or early snow that prevents getting all the corn harvested. There’s a dozen things that could hurt - or help - the corn harvest.
Now, let’s have a look at the worldwide stocks, overall, that combine both of his complaints:
http://www.fas.usda.gov/grain/circular/2009/05-09/graintoc.asp
Nothing to see here. Ain’t no one gonna be starving for ethanol.
The problem with the Argonne study is that they used a high yield harvest model as a starting point and assumed that increasing yields would follow through technology:
“(Argonne)...When looking at past NEV studies, it appears that
energy requirements for producing a gallon of ethanol
are falling over time. One of the primary factors for
this increase in energy efficiency is the increase in
U.S. corn yields. When ethanol first emerged as a
gasoline extender in the 1970s, corn yield was averaging
about 90 bushels per acre. This study used
1995-97 average corn yield of 125 bushels per acre,
which is about 39 percent greater than the yields of the
1970s. Corn yields continue to rise in the United
States—the average corn yield per acre for the past 3
years (1999-2001) was about 135 bushels per acre. If
the 1999-2001 average corn yield were used in this
analysis, the total energy used to produce a bushel of
corn would decline by more than 4,200 Btu. As corn
yields increase over time, we can expect the energy
balance of corn ethanol to increase, as well. Other
major factors causing this increase in energy efficiency
are related to the energy-saving technologies adopted
by ethanol producers and manufacturers of fertilizers
and other farm inputs. Higher energy costs will likely
continue to provide incentives for these industries to
become more energy efficient, which will continue to
push the NEV of corn ethanol higher.”
An unspoken limitation is imposed on all such studies by the fact that the weather won’t wait for the fuel producing industries to decide how much product to refine or to store.
Ethanol, due to its hygroscopic nature stores quite poorly and corn in its best-refining stage requires huge facilities which complicates long range planning.
Pimental’s studies both use worst case scenarios of 90 bu/acre and high energy production costs while Argonne’s studies use idealized ones; a better overall approach would be — from a farmer’s point of view — an average of the two.
Such an average pretty makes it a wash — given the nature of climate and the seasons we can count on some years where we gain and some where we lose.
Going back to the use of ethanol as a fuel we can do so only through a large scale commitment by the auto industry to design engines and sell cars with them that optimize the higher power capability of alcohol, but then we sacrifice the flexibility of petroleum fuels when supply problems inevitably arise.
We won’t be thumbing our noses at the cartel anytime soon, IMO.
Since this has been exactly the case for the last half-century, how is this exactly a bad assumption???? But the specific Argonne study I am referring to is the "meta-study" which summarizes about thirteen different studies. The conclusion is that that "consensus value" is as I stated, a ratio of 1.3 positive energy gain.
"An unspoken limitation is imposed on all such studies by the fact that the weather won’t wait for the fuel producing industries to decide how much product to refine or to store."
So??? This is incorporated into the overall statistics of corn yield.
"Ethanol, due to its hygroscopic nature stores quite poorly and corn in its best-refining stage requires huge facilities which complicates long range planning."
And the USA has some kind of poor track record with building "huge facilities"?? Ethanol's hygroscopicity may indeed be a legitimate disadvantage---but a "negative energy balance" and "causes expensive food" are not.
"Pimental’s studies both use worst case scenarios of 90 bu/acre and high energy production costs while Argonne’s studies use idealized ones; a better overall approach would be — from a farmer’s point of view — an average of the two.
Again---see my point about the Argonne meta-study.
"Such an average pretty makes it a wash — given the nature of climate and the seasons we can count on some years where we gain and some where we lose."
And this will be different from the past exactly how?? Despite the "weather induced variability" corn yields per acre have risen at a steady pace since WWII.
"Going back to the use of ethanol as a fuel we can do so only through a large scale commitment by the auto industry to design engines and sell cars with them that optimize the higher power capability of alcohol, but then we sacrifice the flexibility of petroleum fuels when supply problems inevitably arise.
Haw! You mean the "flexibility" like the Carter energy fiasco, and the recent skyrocketing of the price of oil. sorry, but I'll take the variability of the weather over that kind of roller-coaster ride any day. But you seem to be assuming that ethanol is intended to fully replace oil-----it is not. It only needs to get us off the Muslim tit.
I’m not clear why you pressure this point about the future of ethanol when in the absence of high petroleum prices we now see the smaller and less subsidized producers pulling back on commitment.
Argonne’s study makes short transportation throughputs a given in their assessment which demands wide distribution of intermediate processors; if they aren’t viable they will simply fall out of the network and much of the savings will disappear.
As far as food prices are concerned that will likely need be addressed by the present and future administrations as we decide which crops will serve all needs adequately.
Would you invest your life savings in ethanol right now?
I could give a **** about the future of ethanol. What I am about is scientific FACTS and analysis. Much of what passes through this forum about ethanol is worse than bullshit. Ethanol has some disadvantages, but analysis MUST be fact-based or it is useless. And the facts are that ethanol does not "...have a negative energy balance...", ".....take more petroleum to produce than the energy it yields...", or "...drives up the cost of food....", and various other fantasies.
The energy balance of corn-based ethanol is positive, and the probable future cellulose-to-ethanol is VERY favorable. And it just might be that those plants now producing ethanol can be switched to bio-butanol, which has NONE of the supposed disadvantages of ethanol, and specifically those you mentioned.
My preference would be to build a whole lot of fission plants, resume refining "spent" nuclear fuel, start storing processed waste in Yucca Mountain, resume research on breeder reactors, and quadruple the funding on Bussard's "polywell" fusion. But that ain't gonna happen anytime soon, certainly not during an Obama administration.
I was hoping you would go out on that limb. Here’s a chainsaw for your trouble. Do you really like being a shill for the Airabs?
http://www.brayincandy.com/id118.html
Pray for America and Our Troops
The Pimentel study is long discredited. See the Argonne meta-study as to why. Why do you only quote the ONE study that shows a negative energy balance and none of the many others that show otherwise. Can you say "selective choice of data"? Now go "bray" at someone else, jackass.
I often wonder what a Post-Obama world will bring.
You'n me both, brother. I continue to be amazed the sheer asininity that shines forth from our "leadership". Just when you think they can't possibly by any stupider, they "top" themselves, and sink to a new, record-setting low level.
Sorry, there is nothing there except a theoretical possibility. Like most thugs who don’t have the facts on their side you resort to name calling. If ethanol worked it wouldn’t need gummit $$.
Pray for America
When a dozen studies how a positive energy balance, and three show a negative, I think the truth is pretty well demonstrated. That you deny it, and tout the "minority position" is your problem, not mine. And "braying" is what jackasses do. Live with it.
Did you think that one up yourself. How unoriginal. Waste of land, waste of energy distilling and waste of food. Any time you get the gummit involved you have a bad idea. Live w/it.
Pray for America
None true. Please at least once, TRY to actually say something based on actual fact. Thus far, the ONLY thing you have posted is based on a single discredited "study" by a leftist professor of "ecology", based at what is one of most liberal institutions in the US. Since exactly when is that supposed to convince CONSERVATIVES??.
The "gummint" has been involved in the startup of a LOT of technologies we now use every day (see, for instance, railroads, air travel, nuclear power plants). Your "the "gummint" should never be involved" has NEVER been true in the US.
Before one can argue the economic feasibility of ethanol production vs. traditional fuel production, one question comes to mind. Do the ethanol producers receive government assistance, rewards for being green producers? If so, are the public funds accounted for in the cost factor calculations?
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