29 February 2008
The Ethanol Hoax
Posted by Joy Bischoff under: What's News; World Economy .
Peter Anderson sent me this article which touches on two things that we have talked about. Remember the years that we used to send wheat to Russia so they wouldn’t starve? Now that we need wheat they have just raised their export duties to 40% to force their farmers to keep most of their booming harvests in country. Thanks friend.
Second, the green movement has our farmers growing corn for ethanol instead of growing enough grains for current demand. Prices for grains are rising rapidly and now prices are also beginning to rise for livestock because there is so much less feed being grown. Then there is the fact that the whole ethanol movement is a scam as is clearly shown in the article below. It will break the back of our agriculture system if something doesn’t change.
I read in an agricultural magazine this morning that production of wheat has been less than consumption for seven of the last ten years. We need some sanity back in our agricultural department.
Food Inflation Set to Rise Further
by Michael PentoThere was a clear consensus emanating from the annual U.S.D.A. Agricultural Outlook Forum, which I attended in Arlington, Virginia last week: most in attendance believed that food prices will continue their assent of last year (4%) and perhaps rise by another 3.8%-4% in 2008. U.S. food price inflation will be the result of increasing cost pressures from higher agricultural input prices. These prices, in turn, are the result of strong global demand, continued weakness in the U.S. dollar, the push for renewable energy, low stock-to-use-ratios and global weather that has not been conducive to crop growth in certain regions.
Globally, the two main drivers for the agricultural commodity boom are the appetites from emerging markets and the push for increased use of bio-fuels. …and Russia raised export duties on wheat from 10% to 40%!
Meanwhile, despite the fact that rising corn prices are making ethanol increasingly un-economic, the U.S. is upping the ante on bio-fuels. The mantra from the USDA, which dreams of creating an energy-independent America, was that we must break the economy’s addiction to oil. This explains the 60 ethanol plants currently under construction to go along with the 140 already in existence here. Indeed, last year’s 6.5 billion gallons of ethanol produced in the U.S. is projected to reach 8 billion in 2008. And the goal of this government agency is to take 1.2 million traditional gas vehicles off the road next year while helping to increase the production of ethanol from cellulose, as well.
Worthy goals, perhaps, but of paramount importance at this conference were Robert Dinneen, President and C.E.O. of the Renewable Fuels Association and Dr. Roger Conway of the Office of the Chief Economist from the U.S.D.A. Their contention was that it takes only .7 gallons of fossil fuel to produce a gallon of ethanol.
Here there exists much debate. According to the International Monetary fund, for example, it takes .82 gallons of fossil fuels to create a gallon of ethanol — some yield!
Yet the story might be even worse. According to David Pimentel of Cornell, it takes 29%, more fossil fuel to create a gallon of ethanol than energy yielded from the resulting fuel, a net energy loss! Cellulose and wood biomass seem even less efficient, requiring 45% and 57% more fossil fuel energy than they yield, respectively!
Included in Dr. Pimentel’s analysis are the costs associated with producing the crops including fertilization, irrigation, transportation and processing. Not included in his assessment are the costs for Federal and State subsidies or the costs associated with any resulting environmental pollution.
This professor and ecologist was quoted as saying, “The government spends more than $3 billion a year to subsidize ethanol production when it does not provide a net energy gain, is not a renewable energy source or an economical fuel.” He has also stated that ethanol production leads to natural gas and oil imports and U.S. deficits. And these doubts don’t come from someone who’s biased against alternative fuels; Dr. Pimentel endorses the use of wind power and photovoltaic cells in lieu of ethanol fuel.
Economics be damned, we’re apparently going to keep flushing money down the ethanol toilet, which will continue to put upward price pressure on grain prices at precisely the wrong moment in history, but so be it — we must simply focus on how best to invest in this trend, then.
Along these lines, I wanted to highlight one other interesting set of comments, these from C. Larry Pope, President and C.E.O. of Smithfield Food, whose honesty and candor was quite refreshing to hear. In reference to the current market situation he stated it was “…an unsustainable condition for livestock producers,” pointing out, “input prices have never been higher.” He continued, saying, “There will be a dramatic reduction in meat production and food inflation is set to rapidly increase much higher…it has to happen.”
Michael Pento
Senior Market Strategist
http://www.deltaga.com/”>Delta Global Advisors, Inc.
800-485-1220
20 Comments so far...
CindyL. Says:
29 February 2008 at 1:55 pm.
This is amazing. Nothing on the news about this. It is a horrible fraud that reaches into so many areas of the economy. They are brainwashing everyone. Why isn’t Rush and Sean talking about this?
Jeezer Says:
29 February 2008 at 2:41 pm.
The elite do not care about the US economy. This is one more example of that. You guys mentioned Alan Greenspan telling the United Arab Emirates they should consider dumping the dollar for oil. Greenspan is not interested in saving the dollar or he would never have said that. When are people going to see it isn’t just mismanagement. Even our bureacracy isn’t that dumb. No one could have this much bad luck. Ten year olds could run the country better.
SGS Says:
29 February 2008 at 3:08 pm.
Jeezer, I won’t exactly say that the elites do not care about the US economy. I think it’s more in that they want to manipulate it to suit their desires. In a short term, they may aim to destroy it, but it is only because too much of it resides in the free market. Once they get a string in few places they can pull, they will do everything they can to build it up. Yes, it’s about power, and USA as presently stand is nowhere easy to control as it is in Russia, China or North Korea.
Cameron Says:
29 February 2008 at 3:23 pm.
I agree. I think it is about social liberalism getting the upper hand. I think they are mad because Americans are more stubborn and hard to control unlike some countries like SGS said.
Cavetrollhead Says:
29 February 2008 at 3:47 pm.
The interesting thing to note is that around the world, people are leveling forests to produce corn for ethanol. What an irony eh?
Matt Says:
29 February 2008 at 4:07 pm.
What makes me mad are that there are other ways to produce fuel. Studies show salt water can be used efficiently and cheaply. Lots of other ways have been stifled. We don’t have to go this route.
M.G. Says:
29 February 2008 at 4:41 pm.
We have so much oil. We could have all we needed if they let us drill. Not only that we would also add hundreds of thousands of jobs if we brought back our oil industry.
Cavetrollhead Says:
29 February 2008 at 7:31 pm.
We have a lot of oil alright. But McCain doesn’t want us to drill in the precious Anwar wasteland. I wonder what the real motives of the government on the energy “crisis is.
Joy Bischoff Says:
29 February 2008 at 7:37 pm.
I heard a minister being interviewed on talk radio a few months ago. He was pastoring in the Alaskan oil fields some years back. He became friends with the owners and often sat in on meetings with top officials and was trusted. One day he was flown to a certain place, he didn’t say exactly where it was and was there with the executives when the exciting news was confirmed that they had found an oil field that was probably the biggest in the world. This was in US territory. He spent the night there and the next day when he was leaving he was stopped by the security guard and directed to an office where he was ordered to never speak of this. They said it had been decided in Washington that America’s oil would be saved for the future when other countries run out. The man sounded very credible and well informed. I believed him. I don’t agree with that policy and neither does he.
Cavetrollhead Says:
29 February 2008 at 7:40 pm.
Oil was originally chosen as a fuel partly because it is so cheap to produce. The only thing that makes it expensive is that the market is controlled by so few. I don’t really know for sure, but R&D is not the problem. The problem is that we can’t drill in the US because of politics. So we drive production overseas, thus killing the world’s environment. (they don’t go to the extremes overseas that we do here to keep things clean and safe.)
Hank Says:
29 February 2008 at 7:46 pm.
You know thats a pretty good point. I hadn’t thought of that before. They scream bloody murder about the environment but if its messed up across the world it still effects us here. So if we produce more and use better production standards we are actually helping the environment. To bad no one would listen to logic out there.
Cavetrollhead Says:
29 February 2008 at 10:37 pm.
I wrote my senator, Orin Hatch and made that point. He understood it, agreed with it, and pointed out the wonderful crusade he is on to bring oil production to Utah to extract oil from oil shale( there is plenty of oil in Utah oil shale to run the country) , and to mine clean burning coal. But as far as I know, nothing has happened since then- 3.5 years ago.
Cavetrollhead Says:
29 February 2008 at 10:38 pm.
Anyway Hank, if you proliferate that logic, especially to your environmentally conscious friends, it may help.
Jesse Says:
1 March 2008 at 12:12 am.
Cave, way to get involved. At least you did what you could and Hatch is trying what he can. This is so entrenched at such high level there might not be much we can do but we sure have to try.
Cavetrollhead Says:
1 March 2008 at 1:02 am.
Thank Jesse I appreciate it. I kind of needed to hear that right now.
Yes we do what we can and I think it will change. There is always hope.
Carrie Says:
1 March 2008 at 12:22 pm.
We really do have to keep a positive attitude and have hope. Hope is a very important thing in a world like this and there is still a lot of bright happy stuff around us if we look for it.
SGS Says:
1 March 2008 at 3:46 pm.
I have a friend who claimed to have a friend who is an inventor. He was able to redesign the carburetor (the part that draw fuel, and mix it with air before the mixture gets into the engine) for a few hundred dollars. He ran a test with a lawn mower or something, and he was able to run it 4 times as long on the same amount of gas. He approached a car manfacturer, and they bought his patent for a few hundred thousands. That was way back in late 1980s.
Also, according to my car friends, they have made the tank engine so effecient that it was supposedly to run 200 miles per gallon. However, with all of the weight of armors, ammo, and such (many tons!), the engine actually run something like 4 or 5 miles per gallon, and it wears fairly quickly (they have to overhaul, or replace, engine every 2 or 3 years). What’s nice about this engine is that it could run on any fuel — yes, ANY –, be it petroleum (the same kind of gas we purchase at pumps), natural gas, kerosene, and propane(?).
The federal government just needs to get out of automobile industry, and let the market directs its researches!
SGS Says:
1 March 2008 at 3:52 pm.
Speaking of oil reserve, there is another large reserve of oil in the Gulf of Mexico, especially off the coast of Florida. Our wise legislatives in Washington has passed the law forbidding the companies from drilling within 50 miles of Florida. That’s funny, because, first, you cannot see any oil rig more than a few miles. 50 miles is going to the extreme. And second, the international recognization is that you have the sovernign within 10 miles of the country’s coast. Outside of that, the water is open to anyone. As such, Cuba and China, among others, are actively drilling off Florida within 50 miles, but outside of 10 miles.
It’s so good of our legislatives to trust Cubans and Chineses on treating our environment, better than our own companies who have yet to learn from Exxon Valdez disaster.
E.E. Says:
1 March 2008 at 4:02 pm.
That just burns me up. Think what the world would be like if there was honest and real disclosure from the government and the press. It is so frustrating knowing this and we can’t do anything about it.
Hank Says:
1 March 2008 at 4:56 pm.
You would think people would talk about this kind of thing more. Especially now that gas is so high and climbing higher they should be raising a big stink. I don’t even want to think how high it will be this summer. That will effect the tourist industry since a lot of families won’t be able to go on vacations this year.
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