Ethanol And Hunger

Investors Business Daily (IBD) ^ | April 11, 2008 | Staff

[La Enchiladita]

Energy: The world's poor are learning what happens when government subsidizes the burning of food. It's time to end this madness and let the market decide if any biofuels make sense.

For most Americans, the rising prices at the supermarket are definitely an annoyance, but hardly a threat to life and health. It's a different story in countries like Haiti, where food inflation has led to real hunger and, last week, to riots.

News reports say the poorest Haitians are trying to get by on cookies made with dirt, vegetable oil and salt. Food riots also have roiled Egypt and led to a general strike in Burkina Faso in West Africa. The high cost of corn, wheat, soybeans and other basics of the world's diet could soon start bringing down governments.

It already has set back the fight to reduce global poverty. World Bank Chairman Robert Zoellick estimates that "the effect of this food crisis on poverty reduction worldwide is on the order of seven lost years."

[Dan Evans]

So world wheat production is a responsibility of US farmers

You've got to stop being so defensive about this. It isn't "US farmers vs The World" it is a matter of public policy. The world wide policy of burning food for fuel. It is politicians who are driving this policy.

Farmers do what is in their best interest. They sell food to people who are willing to buy. That include farmers in other countries with starving populations that export grain to be made into fuel.

you who don’t want any price supports and yet want food for nothing.

I don't want food for nothing. I want government to stop distorting the food market with these dubious plans. I don't know if I can stop them from burning food at the rate they are but there are people out there (presidential candidates) who want to increase the rate of food burning by a factor of five. That's five times the farmland, the farm equipment and the farmers that we are using now.

[hubel458]

Do I get to report the abuse of my intelligence.
You don’t know what your talking about.
Somebody please tell him, he won’t believe
me..........I don’t even know why I bother.....

E85 is scam(BIG OIL)fostered on ethanol people to get
results like you post, to put ethanol in a bad light.
That way get consumers mad at ethanol, keeping it down
so BIG OIL still has shortages to raise prices.

You’d expect E85 with 82,000 BTUs per gal of
the mix to get lower mileage, but the 10% mix
with 111,000 BTUs gets better mileage in our regular
compression V8s, than 115,000 BTU gas.
Somebody please tell him........

[hubel458]

It isn’t 5 times times the farmers or farmland
that would be needed to put out ethanol so that
all gas would have 10% blend. Corn acreage is
92 million acres, 1/4 for ethanol, or 23M acres
There is 30 Million in crappy CRP, there is over twice
that acreage that isn’t used or underused.And it all could be farmed by the present number of farmers as it is all
next door to what they already farm.All ag land
being used actively for ag is more than just corn, and farmers if allowed or can make a little, can add to that
the unused acreage, an increase of about 20%...Ed

[Dan Evans]

And Dale Schroeder is part of this conspiracy? He works for the state of Iowa and manages a fleet of 1000 vehicles but he's lying? Did the oil companies buy him off?

I should believe you instead?

[Dan Evans]

It isn’t 5 times times the farmers or farmland that would be needed to put out ethanol so that all gas would have 10% blend.

There is about 3% of ethanol use in our gasoline now and the alcoholics want to raise that to 15%. That's five times as much production. Five times the farmers, five times the land, five times the equipment, five times the water, five times the fertilizer. You want to do with the current workforce? Pay overtime? How much will that cost?

[hubel458]

He is not part of conspiracy, he is just being used, to report what BIG OIL knew what would happen..
He not lying, he is reporting the lower mileage,
of a fuel mix with 81,000 BTUs. 100% gas 115,000 btus.
10% ethanol 111,000 btus, 15% ethanol 109,000 btus.
that way they could foster off most of the
ethanol into the E85 mix, causing lower miliage figures
which then are reported and gets guys like you,
who don’t know gas from shinola mad at ethanol.
The idea being to get people down on it so use will not
go up, thus aiding real or percieved shortages, keeping
oil prices up. Look at the figures, can’t you see
what I’m trying to show you.

20% Eth -107,000 btus; 30% Eth - 103,000 btus
50% Eth - 95,000 btus; and so on..

Most of big companies refuse to blend 10%, but make
E85, just to please gov, and make eth look bad.
Now they blend other oxygenators, mainly polluting
cancer causing ones, that companies they own make.

60% Eth- 91,000 Btus; 70% ethanol - 87% btus,
and so on. Will you apoligise when figured out.

[hubel458]

They want 10-15% in our fuel, but they expect about half
of that to come from imports and non-corn sources.
We wil lput out about 7 billion gals this year from
1/4 of about 92 million acres, or 23 million.Now if that is up 2.5 times we will do about half the the share
of ethanol needed. So instead of 30 million acres in crappy
Crp and 60 million more unused, totaling 90 million,
about 35 million more of the unused 90 million
will be making corn and still leaves land to increase
other crops. And farmers can do it, as the 35 million
added, is about 10-15 % of farmed acreage. It adds a
third to the corn acreage, but a much smaller
percent to overall farm acreage.And if they are
paid, the 15% extra fertilizer, seed, etc will
be applied.There is no problem to adding that much or
more, and we should add it for all crops so that more
is available for export, giveaway(paid for by
donations from speculators), our supply, as well
as ethanol.Ed

[Dan Evans]

So Big Oil and the Democrats are pushing E85 to make consumers mad at ethanol fuels?

I see.

Sounds kind of risky though. How do they know that people will get mad at ethanol and not get mad at Big Oil and the Democrats? But I guess they know what they're doing.

The gas mileage figures we get from the alcoholics for ethanol vary all over the map. You say the best mileage figures are better than pure gasoline for 10% ethanol but worse for 15%. I just read another pro-ethanol group claim that the best mileage (for certain cars) is around 40% ethanol.

[Balding_Eagle]

For sake of dicussion, let’s say that true.

It still leaves a lesson here that all but the bureaucrats and the farmers have forgotten. Based on current input cost conditions (fuel, machinery, etc) the food prices we see today are the food prices needed to eliminate the government from agriculture.

An exception for meat prices. Meat prices today are probaly 25%+ below where they need to be, and will be a year from now. That’s because beef and hog feeders are liquidating in response to the current grain prices. They won’t be back until they have a reasonable expectation of a profit.

I remain convinced that the average consumer who complained about ‘farmers being paid not to grow crops’ expected this kind of outcome.

[hubel458]

I did did not say 15% got worse mileage, it is
E85 that gets worse mileage. 15% has about
109,000 btus and gets good mileage . E85 is not the same
and it has about 81,000 btus ....Here it comes....
.............E85 is 85% ethanol..........
I didn’t say Dems were doing it, they don’t what they
are doing, anymore than most REP. We had E85 here,
didn’t last long has people got upset with. Now alot
of them won’t even buy the 10%. Some in the oil companies don’t want to be bothered with ethanol, and
in essence said if it is any good it should go mainly
on its own, and we ended up with E85, which was
pushed at a lot of coop owned stations to start with.
Which leaves system screwy. Just put 10% in all you
can, no special engines, the computer advance timing
to account for higher octane.
Engines can be tuned and with right computer chips
burn up to 30-40% and gain a little.Ed

[thackney]

But you guys have got to understand farmers are tired of living on the dole, and the corn, soybeans, etc can’t go back to all being just people food.

I have no problem with crops used as fuel, as long as they are not subsidized. That is really the only problem I have with it. I also argue against those that claim crops are going to supply a majority of our fuel. That math does work.

you have no legimate grip against them or ethanol The only legitimate grip is against speculators

And the subsidies.

Congress can change investment rules which would solve most of the inflated values.

No, that would only drive 100% of the trading overseas to London, Tokyo, Singapore and Dubai. Oil is a global, fungible commodity. That would only move all of the trading out of any control.

Please recognize that the trading is not new. But the supply margin of petroleum became so tight that trading could take advantage of that. If congress actually wants to help the situation, they should open up more of our domestic areas for exploration and production.

[hubel458]

Point one-There is no subsidy now for corn,
wheat, etc, for farms.

Point 2- No, crops can’t supply majority of our
fuel but they could do 10% of the gas. The reason
keep mentioning 10%, and it could be 7-8-9-11, is
it is a foot in the door that helps to break
monopoly of just oil. Look at the huge number articles
coming out telling all the lies about, all the
screwy machinations oil co are doing to it,
BIG Oil resisting using it in 10% blend, pushing
there own oxygenator, thatis a polutant and cancer
causing...... I learned when all the wrong people
and companies are fighting something this hard(seems
about as much hurrah as the election) it must
be the correct thing to do.

Three- That tax credit BIG OIL gets is wrong,
but it ain’t the fault of ethanol or farms.
BIG OIl gets 20 times more than that in other
tax credits also on oil production.

Four- If speculating rules being tightened up cause
a drop in prices here, I think other gov
would do the same, as they are in far more trouble
over high prices than we are, so we could show
the way. Other gov who aren’t ME oil producers
are in much worse condition over food than we are.

Five—And the word that oil supply margin is tight
isn’t true, as reports now say our refineries are
not operating 100% and present demand doesn’t need a
100%. Oh, the word is there and everyone believes it.
So it still goes back to speculators using
every trick and communications venue to cause rumors
and controversy, to drive up the prices of what they
own, to get the next speculator to buy. Then that
one does the same. All they care about is a little
profit on each trade, with only reservation being
that they try to be the next to last guy before
anything takes a dive. Ed

[thackney]

Point one-There is no subsidy now for corn, wheat, etc, for farms.

Ethanol is subsidized at more than one point. Some claim up to $1.5/gallon. All gets 51¢ at the blender, this supports a higher price for the fuel than the market would support otherwise.

http://zfacts.com/p/63.html

http://www.ethanolrfa.org/policy/regulations/federal/

http://www.ethanolrfa.org/policy/actions/state/

Point 2- No, crops can’t supply majority of our fuel but they could do 10% of the gas.

In 2007, the US used 3,390,977,000 barrels of motor gasoline. 10% would be over 14 billion gallons of gasoline. Using 151 bushels of corn per acre and 2.7 gallons per bushel that requires about 35 million acres of corn. A little over a third of all corn planted in in 2007. Add whichever fuel efficiency of ethanol/gasoline for mpg. Probably between 10~20% depending on who is making the argument. It is a production level that I agree can be reached.

Take out the subsidies above and I'm all for it.

Three- That tax credit BIG OIL gets is wrong

Tax credits? Look at the total tax bill. I believe no other industry pays higher tax rates than oil companies.

ExxonMobil 2007
Revenue $404.6 Billion
Profit $40.6 Billion (10.0%)
Taxes $102.5 Billion (25.3%)

Sales-Based taxes $31.728B
Other taxes and duties $40.953B
Income taxes $29.864B

2007 Financial & Operating Review
http://www.exxonmobil.com/corporate/files/news_pub_fo_2007.pdf
Page 16

- - - - - - - - -

ConocoPhillips 2007
Revenue $194.5 Billion
Profit $11.9 Billion (6.1%)
Taxes $30.4 Billion (15.6%)

Taxes other than income taxes $18.990B
Income taxes $11.891B

2007 Annual Report
http://www.conocophillips.com/NR/rdonlyres/3838234F-F20C-4BCE-AE8D-78DE29D67455/0/07RevisedARfinal.pdf
Page 60

- - - - - - - - -

Chevron 2007
Revenue $220.9 Billion
Profit $18.7 Billion (8.5%)
Taxes $35.7 Billion (16.2%)

Taxes other than income taxes $22.266B
Income taxes $13.479B

2007 Annual Report Supplement
http://media.corporate-ir.net/media_files/irol/13/130102/reports/CVX_ARsupp07.pdf
Page 3

- - - - - - - - -

Marathon 2007
Revenue $62.8 Billion
Profit $4.0 Billion (6.3%)
Taxes $8.5 Billion (13.5%)

Consumer excise taxes $5.163B
Other taxes $0.394B
Income taxes $2.901B

2007 Annual Report
http://www.marathon.com/content/documents/investor_center/annual_reports/annual_report_2007_book.pdf
Page F-4

- - - -

Four- If speculating rules being tightened up cause a drop in prices here, I think other gov would do the same

You really believe that? Tell me what would make Dubai (UAE), a member of OPEC, want to do that?

Five—And the word that oil supply margin is tight isn’t true, as reports now say our refineries are not operating 100% and present demand doesn’t need a 100%.

Refineries don't produce oil, they consume it. As for gasoline production, US stocks have been falling but are still above average.

Oil is a global commodity and the supply margin on oil production is still below average.

[hubel458]

Out of all that gross income big oil could give up
that 4 billion in credits. I know that the term blender puts them in better light. But it is still big
oil companies. They still get in tax code 20 times
that in other allowances. That 4 billion is one thing of record and those who say that farms etc get a $1.50
can’t show where it is.
I was figuring a few more acres than that and total
overall corn acres larger, so that there would
be increase on the food side. There is so much unused
farmland in and out of gov programs. 30 million
in CRAPPY, and twice that much other.We went by a
dozen fields today that are getting planted for the
first time in many years. Good land where the guy
who was there farmed once, old/retired/died, land went
idle or in CRAPPY. Now farmers who are there in communities are bigger, and can take it on
and produce corn, grain, hay.And average output per acre
has increased also about 3 bushels/yr for last 15 yrs.
That is same adding 3 million acres to the 92 million
we had last year.We may see 100 million in corn next couple years. and still could increase other crops.
There is no reason not to as ther eare markets needing
the supply.Ed

I meant gasoline.
The gas stocks are above average and refineries are
doing maintenance now, so demand for oil is down
as I said, as you’d expect when refineries aren’t running full speed. But yet the news is all shortages,
speculators play their games, based on news, controversy,
and they take turns jacking it up.

[thackney]

You can no more interchange gasoline and oil as you would corn and ethanol.

Oil is up in price. Global demand for oil is up.

The largest price component of gasoline is crude oil and it is up.

The cost of crude oil has risen more than any other component cost of gasoline.

Gasoline Pump Data History
http://tonto.eia.doe.gov/oog/info/gdu/gaspump.html

[hubel458]

Global demand may be leveling a little due to
other nations economic problems and our
little lss demand. But that don’t stop speculators.
You look at the graph and the only thing that
has risen of the 4 components of the gasoline
price........... is the one speculators..........
get their hands on.........I think some speculators
don’t care about profits, you know the Soros types,
who are trying to hurt our country.As weell as drive up oil prices which raises their income. Another crappy
article just above this on on FR, reporting that oil
ministers saying that ethanol is the only factor
in food prices going up, and not their oil prices.
and same foriegn oil people are the speculators...

[gogogodzilla]

Just colonize the moon and Mars, for pete’s sake! We’ve had the friggin’ technology since the 1980’s (perhaps earlier).

[gogogodzilla]

First, surpluses. The Farm Program is calculated to produce surpluses every year, and that’s usually easy to do, simply relax the controls a bit and the farmers will deliver enough grain to satisfy domestic use, exports, and extra grain in the bins throughout the year. The government even pays a subsidy to farmers to build storage, encouraging even more grain on hand.

So, you're saying that it's the government that forces the poor farmer to produce a surplus? That normally, the farmer would just plow enough land to feed himself and his family?

[gogogodzilla]

Not to mention that if ethanol really was cheaper, he’d be using it to power his farm equipment.

You know, to lower his expenses.

It’s quite telling that he’s still using oil-based fuels to farm with.

[gogogodzilla]

The overwhelming majority of U.S. corn, including exported corn, feeds livestock—not humans. There is a popular misconception that corn is exported from the U.S. to feed those in malnourished countries, and thus ethanol use will diminish exports to these countries. The truth is the majority of corn exports are used to feed livestock in developed countries. Importantly, the U.S. ethanol industry is helping to satisfy foreign demand for high-protein, high-energy feedstuffs by exporting more than 1 million metric tons of distillers grains to countries around the world in 2005.

Gee, so if we take off the market 1/4 of all the animal feed for developed nations... what do you think that they are going to get to feed those animals?

Fairy dust and moonbeams?

No, they're going to buy food. Food that had previously been going somewhere else. Like all those less-developed nations with all those less wealthy populations.

BTW: since you're a farmer, you should already know that chickens can eat the distiller's grain. Care to speculate as to what'll happen to the price of chicken if there is less chickenfeed out there for the chicken farmers to buy?