Posted by
on Thursday, May 22, 2008 2:05:41 PM
With the recent issues surrounding ethanol’s link to corn prices and the increase in food prices there have been several misleading and missing facts about ethanol, oil and food prices. First and foremost, corn used for ethanol is not used for human consumption; it is mostly used to feed cattle and poultry. There have been many pundits that use the phrase “food for fuel” which paints a mental picture of a person going hungry because we are driving food off their plate and into our fuel supply. The type of corn used to make ethanol is not the same corn we eat out of a can or throw on the grill Sunday afternoon.
The USDA states that 5.65 billion bushels of corn will be used for animal feed while 3.2 billion bushels will be used for ethanol production. Only 1.79 billion bushels is used for food use & seed. When ethanol is produced from corn only the starch of the kernel is converted to ethanol. Ethanol production does not use the entire kernel of corn. The vitamins, minerals, proteins and fiber are not used in the ethanol process and get sent back into the feed markets in a form of high value feed called Distillers Dried Grains.
What other “food” uses would the starch of a standard bushel of corn provide us if we did not use it for ethanol? It would produce 32 pounds of starch used in
Adhesives, Batteries, Cardboard, Crayons, Degradable Plastics, Dyes, Plywood, Paper, Antibiotics, Chewing Gum or it would be further refined into corn sweetener used in Soft Drinks & Juices, Jams and Jellies, Cereal, Licorice, Peanut Butter, Catsup, and Marshmallows.
When looking at increasing food cost we must make a factual and informed decision. A barrel of oil cost over $120 and many experts (and OPEC's projections) expect that number to reach $200. According to the Federal Reserve Bank in Kansas City “a 10 percent gain in energy prices could contribute 5.2 percent to retail food prices”. Since January, the price of oil has increased approximately 30 percent. Every dollar we spent on home grown Biofuel is .70 cents not sent to foreign oil producing countries that often times are not looking out for the U.S. ’s best interest, and too often quite the opposite.
Oil has its limitations and a fixed supply. Even with the “wind fall profits” of Exxon Mobile, the company was not able to maintain the production level of crude oil and lost 10% of their on-line production in 2007. In an interview with Bloomberg News in July of 2006 Dr. Ali Samson Bakhtieri, a former senior executive of the National Iranian Oil Company stated that “world oil production is now at its peak” and predicted that oil production would fall 32% by 2020. According to the International Energy Agency, world-wide production of oil has been flat since 2005 and decreased .7% in 2007 (and the IEA included ethanol and Biofuels in the 2007 total oil production calculation). Oil will never completely run dry, but our pocket books will. Dwindling supply and increasing demand from surging nations such as China and India is a recipe for continued sky rocketing prices.
The growth in ethanol is outstanding and ethanol is saving us money at the pump. We are on track to replace 10% of our gasoline consumption in less than three years. Breakthrough technology is happening every day. Merrill Lynch analyst Francisco Blanch estimates that gasoline prices would be about 15% higher today if Biofuel producers were not increasing their production of fuel. It is easy to cast blame at the Biofuel industry for the increase in food prices. But we can not afford to overlook the benefits we have gained and the potential that lies ahead for the emerging industry.
Every year we can plant the same amount of corn and through the use of better seed and farming techniques get more and more bushels off of the same acre of land. As we focus more science into better yields and bring idle farm land from around the world back into farm production there is no telling what the future holds for Biofuels. The growth of the Biofuel industry is not without pain, but neither is the production loss and limitations of oil.
Raine Cotton
President
Southeast Renewable Energy
http://www.serenew.com