Ethanol Lowers Fuel Prices!

A new study shows that the use of American ethanol saved the average U.S. motorist about $800 last year.

The study, by Iowa State University and University of Wisconsin, economists says that without ethanol, gasoline prices in U.S. would rise almost 92%.

The impact of ethanol production on U.S. and Regional Gasoline Markets for the period 2000 to 2010 was evaluated by economists the Center for Agricultural and Rural Development at Iowa State University. The results of the study, released last week, show that blending ethanol with gasoline had a dramatic effect on lowering fuel costs.

• The CARD study says that increased use of ethanol reduced wholesale gasoline prices by an average of $0.89 per gallon in 2010.
• Midwesterners benefited the most from ethanol because last year they saved $1.37 per gallon compared to the national average of $0.89.
• The growth in ethanol production reduced gasoline prices by an average of $0.25, or 16% over the entire decade of 2000 - 2010.
• Department of Energy data shows U.S. gasoline use averaged 138 billion gallons per year from 2000 to 2010, resulting in an annual average savings due to ethanol of $34.5 billion.
• Last year alone, ethanol reduced the average American household's gasoline bill by more than $800, according to the Renewable Fuels Association.
• Since ethanol now makes up nearly 10% of the gasoline used in automobiles in the U.S., CARD's economists measured the impact of ethanol's disappearance from the fuel market. If ethanol was no longer available, gas price increases would be of historic proportions, rising by as much as 92% in the short-term.

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Corn Prices Higher Regardless of Ethanol

To hear critics of corn ethanol spin it, the reason corn prices are high is because of that mean ol' nasty ethanol.

But the facts and analysis from economists just don't support that skewed thinking.

Corn prices would have done about the same thing with or without ethanol.

That's the conclusion of a recently released report from the Iowa State University Center for Agricultural and Rural Development (CARD).

The analysis by Bruce Babcock and Jacinto Fabiosa showed that general pattern of corn prices seen during 2006-2009—increasing prices in in 2006 and 2007, a price spike in 2008, followed by a sharp price decline in 2009—would have occurred without ethanol subsidies or even if corn ethanol production had not expanded.

It also showed that investor speculation for corn ethanol in 2005, 2006, and 2007 would have occurred even without subsidies due to a combination of cheap corn, a phase-out of MTBE, and higher crude oil prices which made ethanol profitable. Thus, ethanol production would have expanded quite rapidly even without subsidies.

Using the 2004 corn price of $2.06 per bushel as a reference, actual corn prices increased by an average of $1.65 per bushel from 2006 to 2009. Only 14 cents (8%) of this increase was due to ethanol subsidies. Another 45 cents of the increase was due to market-based expansion of the corn ethanol industry. Together, expansion of corn ethanol from subsidies and market forces accounted for 36% of the average increase that we saw in corn prices from 2006 to 2009. All other market factors accounted for 64% of the corn price increase.

New Study on Indirect Land Use Change Clears Biofuels

Michigan State University (MSU) released a new study this week that clears biofuels from Indirect Land Use Change (ILUC) charges.

The report conducted by MSU scientists Seungdo Kim and Bruce Dale says that biofuel production in the United States through 2007, “probably has not induced any indirect land use change.”

This new reports sets the record straight from previous reports that maligned biofuels by using incomplete and faulty data.

ILUC has been used as an argument for stopping biofuels development.  The theory goes that any acre used in the production of feedstocks for biofuels in the U.S. results in a new acre coming into food or feed production somewhere else in the world.

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Rising Gas Prices; America Held Hostage to Foreign Oil

America continues to be held hostage to foreign oil.  And we are paying for it.  Literally.

It's hitting everyone's pockets hard.  Rising gas prices continue to climb.  For anyone who has visited a gas pump recently, it's really no surprise.  Gas prices across the country often top $4 per gallon for regular unleaded.  And in some markets, $5 per gallon is the new "norm".

But the pain doesn't just stop at the local Shell, Mobil or Texaco station.

Higher gas prices, brought on by higher world oil prices, means these higher costs will be passed along to consumers in higher costs for everyday items like food and merchandise.

And just very conveniently, Big Oil will show record profits.

We're addicted to oil. Foreign oil.  Foreign oil that fuels the economies of countries and dictators more than happy to see the fall of American prestige and economic and military might.

The death of Osama bin Laden, among other factors, fuels the fears that access to foreign oil will be stopped or curtailed.

But it doesn't have to be that way.  America needs to continue to move to alternative fuels.  And ethanol is already playing its part for a renewable future for America.

But more ethanol pumps are needed.  And more vehicles capable of using higher blends of ethanol (for example, up to 85% ethanol).

In conjunction with other energy strategies, America can reduce its dependence upon hostile countries.

But not if Big Oil has its way.

Source: US Department of Energy

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That's a Lot of Hamburgers.

It really is Food AND Fuel for America and the world.

An important point often overlooked in the war against corn ethanol is that 1/3 or the corn used for producing ethanol is returned as Dried Distillers Grains.

Ethanol production requires only the starch portion of a corn kernel to produce the American-grown, renewable fuel. The remaining protein, fat, fiber, and other nutrients are returned to livestock feeders.

A new report this week from the Renewable Fuels Association, Fueling a Nation; Feeding the World, shows that the US ethanol industry is providing an important and growing nutritious livestock feed for both domestic and international markets.

According to the RFA report, America’s ethanol producers produced nearly 35 million metric tons (mmt) of livestock feed in the 2009/2010 marketing year.  That's a lot of corn that is being returned to the livestock market.

According to the RFA, by volume, that production is greater than the total amount of grain consumed by all of the beef cattle in the nation’s feedlots.

The RFA also pointed out some fun facts about how much corn this represents:

For the current 2010/2011 marketing year, feed production from the ethanol industry is projected at 39 mmt.  

- if the 39 mmt of livestock feed was a country’s corn crop, it would represent the 4th largest crop in the world 39 mmt of livestock feed would be enough feed to produce 50 billion quarter-pound hamburgers – seven patties for each person on the planet 

- 39 mmt of livestock feed would be enough to produce one chicken breast for every American every day for a year

American ethanol produces both Food AND Fuel.

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Record Corn Crop for 2011 / 2012 Projected

The USDA released its World Agricultural Demand and Supply Estimate report this week and the corn crop shows a projection for a record 13.5 billion bushel crop for 2011.

Corn production for 2011/12 is projected at a record 13.5 billion bushels, up 1.1 billion from 2010/11 as a 4.0-million-acre increase in intended plantings and a recovery from last year’s weather-reduced yields boost expected output.

Reference:
World Agricultural Demand and Supply Estimates (WASDE), May 11, 2011 (PDF)

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Experts say energy, weather, unrest responsible for higher food costs

An AP story this morning (appearing on the Washington Post website), was right on laying out the facts that rising energy costs, weather and unrest are more likely to cause food costs that farmers.

“It’s a whole slew of things that have influenced that price,” said Chad Hart, an agricultural economist at Iowa State University. He ticked off some of them: “When you look at the cost of our food, it is related to the cost of corn, soybeans and wheat and cattle but also the cost of oil, gas, diesel and unrest in other parts of the world.”

The folks at the Grocery Manufacturers Association (GMA) have already started their propaganda machine to lay the cost at the door of America's farmers while ignoring rising energy, marketing and profits.

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