There is only a tax credit for big oil and that should be
gone.Farmers get none of that. The gov mandate is
for oxygenators and we need them for cleaner emissions
to help cut air polution. My cars run great on 10%
blend, the V8s getting an extra mile per gal.
The other oxygenators cost more and big oil uses
them, and they are cancer causing. About speculators-
What they’re doing is buying and selling for quick profit, and they are drawing in more investors with
rumors, etc, of always greater shortages and rising prices.
Relative to money in oil or gold speculating, corn is
small volumne and the extra push of money has geometric
affect on prices. Reason- we have about 13-15 billion
bushels of corn a year, where say in oil we have that
many gallons in 12 days, so the speculation pressure
affects corn so much more, as it is relatively small
compared to oil, gold, bonds,etc. The speculators don’t
buy grain to sell to ethanol plants, or food processors,
they just buy a block of it to sell to the next speculator,
for quick profit,and the actual processor forced to pay
someone in actual physical control the price set by
the speculators. And at no time, so far, has there been
a shortage of corn, for the board of trade to have, to
put up blocks of it to speculate on. Think about it.....
they haven’t run out of any to speculate on.......
so there is no shortages....just prices driven up by
a lot more money speculating......Ed.
That's what a futures market does, it guarantees that there will be no shortages or surpluses. The price for that is fluctuations in price. That's one reason why you could buy gasoline for 99 cents a gallon ten years ago and why it is so expensive today.
Grain prices have increased because of the huge demand for grain. If a large fraction of the grain is diverted for fuel, there is no other result you could expect than price increases.
Look at it this way. If 5% of our wheat acreage were used for fuel crops then 5% fewer loaves of bread can be made. The only way you can avoid shortages is to raise the price of bread. If the price elasticity of demand for bread is .15 then the price of bread has to increase by 33 percent for supply to meet demand (5%/.15). It has nothing to do with the cost of grain as a percentage of the selling price.
If the car companies can't buy ball bearings at any price then they can't make any cars. The price of new cars goes through the roof even though ball bearings are a tiny percentage of the price of cars.
By they way, I just saw an estimate the 28% of our corn harvest be needed to supply all the ethanol refineries that are being built.