Comments on: Ethanol and Your Food Budget http://growersandgrocers.net/2007/02/15/ethanol-and-your-food-budget/ From farm to table, and all the stops along the way. Thu, 08 Jan 2009 21:25:44 +0000 http://wordpress.org/?v=2.0.4 by: Marc Rumminger http://growersandgrocers.net/2007/02/15/ethanol-and-your-food-budget/#comment-9220 Sat, 17 Feb 2007 18:50:57 +0000 http://growersandgrocers.net/2007/02/15/ethanol-and-your-food-budget/#comment-9220 tedo asked in comment #1: If Ethanol lessens the price of gas, doesn't that also help food prices since it costs less for grocers to ship produce? As far as I know, decreasing the price of vehicle fuel in the near term is not one of ethanol's main advantages. It is costly to manufacture and has only 2/3 the energy of gasoline (meaning that you travel only about 2/3 the distance on a gallon of ethanol as on a gallon of gasoline), and receives massive subsidies (several billion dollars per year). Ethanol's momentum seems to be from politics, a huge corn-growing infrastructure, national security concerns, and climate change concerns. As for the possibility of reducing the cost of produce shipping, most long-haul trucks, trains, ships, and farm tractors run on diesel fuel, so a decrease in the price of gasoline won't directly affect their operation. However, diesel fuel is also made from crude oil, so switching some of the crude oil from the gasoline refinery to the diesel refinery might bring down costs. But this raises all kinds of questions I can't answer: is the excess diesel refining capacity available in the right places? Is the demand for diesel strong in markets with excess diesel refining capacity? tedo also asked: If we use more corn for fuel does that mean we can use less for sweetners like high fructose corn syrup, hopefully weening ourselves off that vial invention? One can only hope. The article I cited above included an estimate of a 25-percent increase in HFCS prices in 2007, but since the cost of HFCS in soda is a small fraction of the retail price (most is probably in marketing, capital, transportation, and labor), I doubt that demand will change very much. Fast food chains can probably absorb the cost. On the other hand, it is conceivable that the big corn processors will see more revenue opportunities in ethanol than HFCS, and shift their efforts in that direction, thus significantly increasing the price of HFCS. A Gristmill blog post has a nice summary of ethanol subsidies, both direct and indirect (http://gristmill.grist.org/story/2006/10/27/104044/92), and a U.S. News article has an overview of some of ethanol's costs and benefits (http://www.usnews.com/usnews/news/articles/070204/12ethanol.htm) tedo asked in comment #1: If Ethanol lessens the price of gas, doesn’t that also help food prices since it costs less for grocers to ship produce?

As far as I know, decreasing the price of vehicle fuel in the near term is not one of ethanol’s main advantages. It is costly to manufacture and has only 2/3 the energy of gasoline (meaning that you travel only about 2/3 the distance on a gallon of ethanol as on a gallon of gasoline), and receives massive subsidies (several billion dollars per year). Ethanol’s momentum seems to be from politics, a huge corn-growing infrastructure, national security concerns, and climate change concerns.

As for the possibility of reducing the cost of produce shipping, most long-haul trucks, trains, ships, and farm tractors run on diesel fuel, so a decrease in the price of gasoline won’t directly affect their operation. However, diesel fuel is also made from crude oil, so switching some of the crude oil from the gasoline refinery to the diesel refinery might bring down costs. But this raises all kinds of questions I can’t answer: is the excess diesel refining capacity available in the right places? Is the demand for diesel strong in markets with excess diesel refining capacity?

tedo also asked: If we use more corn for fuel does that mean we can use less for sweetners like high fructose corn syrup, hopefully weening ourselves off that vial invention?

One can only hope. The article I cited above included an estimate of a 25-percent increase in HFCS prices in 2007, but since the cost of HFCS in soda is a small fraction of the retail price (most is probably in marketing, capital, transportation, and labor), I doubt that demand will change very much. Fast food chains can probably absorb the cost. On the other hand, it is conceivable that the big corn processors will see more revenue opportunities in ethanol than HFCS, and shift their efforts in that direction, thus significantly increasing the price of HFCS.

A Gristmill blog post has a nice summary of ethanol subsidies, both direct and indirect (http://gristmill.grist.org/story/2006/10/27/104044/92), and a U.S. News article has an overview of some of ethanol’s costs and benefits (http://www.usnews.com/usnews/news/articles/070204/12ethanol.htm)

]]> by: tedo http://growersandgrocers.net/2007/02/15/ethanol-and-your-food-budget/#comment-9126 Thu, 15 Feb 2007 12:50:25 +0000 http://growersandgrocers.net/2007/02/15/ethanol-and-your-food-budget/#comment-9126 I'm not a huge fan of ethanol as I don't think the benefits are nearly what people think they are, but this article raised a couple of questions for me. The first being based on your last paragraph. If Ethanol lessens the price of gas, doesn't that also help food prices since it costs less for grocers to ship produce? If we use more corn for fuel does that mean we can use less for sweetners like high fructose corn syrup, hopefully weening ourselves off that vial invention? Just a couple of random thoughts. I’m not a huge fan of ethanol as I don’t think the benefits are nearly what people think they are, but this article raised a couple of questions for me. The first being based on your last paragraph. If Ethanol lessens the price of gas, doesn’t that also help food prices since it costs less for grocers to ship produce? If we use more corn for fuel does that mean we can use less for sweetners like high fructose corn syrup, hopefully weening ourselves off that vial invention?
Just a couple of random thoughts.

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