Ethanol Disaster

Ethanol Disaster

Soaring demand for corn to make ethanol could trigger higher U.S. food prices and riots in low-income countries as grain supplies tighten, according to a report released Thursday.

The government has vastly underestimated the amount of corn needed to fuel the demand for ethanol, according to the report from Lester Brown, a researcher and president of the Earth Policy Institute, an environmental think tank in Washington.

Corn is the main ingredient for ethanol, which is mixed with gasoline to make motor fuel. A bushel of corn produces about 2.8 gallons of ethanol.

About 20% of Wisconsin’s corn crop is destined for the fuel additive, which is significant, considering that the state didn’t have an ethanol plant six years ago.

Across the Midwest, farmers are selling more corn to ethanol plants and are getting some of their highest prices in a decade.

In 2008, U.S. ethanol production will consume 139 million metric tons of corn, roughly half the nation’s corn crop, the report notes. If that estimate is even close to being correct, the resulting strain on supplies of the ubiquitous crop could have dire consequences.

“What we are beginning to see is the unfolding of an epic competition between 800 million people who own automobiles and want to maintain their mobility, and the 2 billion poorest people in the world, many of whom are spending more than half of their income on food already,” Brown said at a news conference....

...The U.S. corn crop accounts for 70% of world corn exports....

No matter the reliability, or lack of it, for this source, it is clear that using corn to make ethanol only makes sense to vote-buying politicians and the direct beneficiaries.

Already we have seen ultimately futile price controls by the Mexican government on tortillas as corn crops are diverted.

This morning in the supermarket I found that cottage cheese had gone up by nearly 40% in the last week. I still think that this is a mistake in pricing, but who knows.

Is it possible that the Bush (mis)-Administration has found a way to screw-up with a bigger negative global impact than even the Iraqi invasion?

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