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Mizzou_Tiger
Senior Advisor

Ethanol..........

http://www.nytimes.com/2012/01/02/business/energy-environment/after-three-decades-federal-tax-credit...

 

 

I would expect to see food and fuel prices to come down significantly..........and the federal budget balanced..........all by election time...........because this evil tax credit is gone..........

 

on a quick side note...........anyone following whats going on in/with Iran.............ethanol looks pretty freaking good compared to sending money to that rat hole............

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8 Replies
GoredHusker
Senior Contributor

Re: Ethanol..........

Currently, we're using over 40% of the nation's corn crop to make ethanol.  Currently, ethanol makes up less than 3% of all road fuel.  If this is the best answer we have, then we all better get our horse and buggies back out.

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Mizzou_Tiger
Senior Advisor

Re: Ethanol..........

I guess 3% isn't enough for you to keep our boys out of harms way...........

 

ethanol is part of a solution, that should also include nat gas, oilseed based biodiesel, domestic and NA/SA origin oil, and more energy efficient engines..............

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GoredHusker
Senior Contributor

Re: Ethanol..........

40% of the entire crop to make up just over 2.5% of road fuel.  80% would be around 5%.  We could use the entire U.S. corn crop and still fall well short of 10% of the road fuel.  This will not keep any of our boys out of harms way.  Natural gas is the bridge, but apparently the powers that be don't see it yet. 

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jec22
Veteran Advisor

Re: Ethanol..........

Gored, see the new year has brought back the real you.  I was worried when you were a little bullish the last month.

 

Ethanol has done great things for Iowa's economy and helped it avoid the high unemployment the urban areas fight.  All those grain farmers' money circulates many times over.  Farmers have a problem not keeping the money hot.  Farmers really do spread the wealth.  You take away ethanol, drop the grain prices, and raise the gasoline prices, and Iowa's economy would not look very good.  Last I looked, Pioneer, John Deere, Vermeer, Kinze and others were adding jobs in Iowa.  Now it is taking livestock along the good times gravy train.

 

But you left out one thing, you should have said, horses, buggies and guns.  Because the money spent on ethanol from Uncle Sam is pennies compared to welfare and unemployment payouts.  And if that money gets cut....welcome to the new wild west.

 

I am sure since you are against government supporting the blenders credit and mandate, you are just as passionate about the huge tax breaks big oil gets?  How is the solar loans working out for taxpayers?  And who says all this fracking is not doing damage?

 

We argue about ethanol, when the MF Global robbery and global debt are the monsters in the room.  I guess it is a good distraction from the real problems out there.

 

My long rant continues.  I used to believe that the USDA report never got leaked.  I no longer believe that.  When someone running for office gets a preview of an unemloyment report.  When Paulson tells 20 hedgefund managers that fannie and freddie are puking in bad loans ahead of the 2008 crash.  When it is legal for MF Global to rob their clients money,  I left that belief behind.  But I think going to private estimates would be far worse.

 

What is really hard to get my hands around.  How good ag has been for the grain farmer in the last few years in spite of it all.  Crazy.  Atleast nothing is boring these days. 

 

Alot of grain was moved out of farmers hands  in the last couple of months. 

 

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GoredHusker
Senior Contributor

Re: Ethanol..........

I think you missed the entire point.  I didn't even talk about ethanol with regards to Iowa's or even the Midwest's economy.  The point was that ethanol as a fuel source is a pittance when compared to crude oil.  We could take the enitre U.S. corn crop, convert it to ethanol, and ethanol would still make up less than 10% of road fuel.  As great as ethanol has been for Midwestern economies and such, it will never be a significant source for fuel here in the U.S.  As everything stands now, ethanol's biggest contribution is replacing MTBE. 

 

It's somewhat comical when one looks back and reflects.  The ethanol groups, corn boards, etc. all threw their support behind Obama for the 2008 election because there was fear if McCain won the Presidency that ethanol subsidies would be removed.  Here we are today without ethanol subsidies and Obama is the President. 

 

With the way things are currently going, we're in jeopardy of losing the entire ball of wax.  We've produced two substandard corn crops in a row.  Stocks to use are tight, and there's already been legislation sought to remove mandates.  If things get too crazy this summer, it's likely there will be major changes.  I'm of the opinion that we've overdone it and over promoted it.  Now, we could be faced with losing it all.     

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Palouser
Senior Advisor

Re: Ethanol..........

We could lose it all Gored, but not easily. The reverse of your perspective could be seen as unending support for ethanol for the near future. Yes, ethanol is a pittance of fuel usage. In comparison to budgeting troops in the ME it's probably a bargain. If ethanol were @ 20% of gas usage I'd be a bit more worried. We still need a source of octane booster and ethanol works for that. I don't really know that any alternatives are in the works for that use. If unleaded gas were a lot cheaper than ethanol it would undermine ethanol, but it isn't last I looked. As far as I know oxygenated fuel is still helpful in urban areas.

 

It is worrisome that corn  markets are now dependent on ethanol in N America. We are now exporting which is a very good sign that it is a viable global commodity. I think the fact of the matter is that E is now too big to fail in rural America. If any possible administration were of the trust busting T Roosevelt kind I'd be more worried but it's for sure that's not the case since the banks seem to have too much leverage on the government at this point and any Repub administration would be even less likely to go this way.

 

The perfect solution would be some of the long awaited techical advances of cellulosic that would pave the way for a gradual shift away from corn which could then be gradually shiftto supporting the dietary needs of the quickly developing nations.

 

 

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Roadpizza
Senior Reader

Re: Ethanol..........

I hate to get drawn in to such silly arguments but here goes.  Why deliberately misuse data other than to justify your rant against a viable product?  Those that argue against ethanol because it is not "the" answer missed ethanol's message from the beginning.  Nobody I know ever said ethanol was "the" answer.  It is part of 'the" solution. 

 

The reality is that ethanol replaces very close to 10% if the unleaded gas consumed in the US.  I believe it has hovered around 9.5% for some time now.  To me, that % is significant.  I grant you that is not all road fuel you refer to.  I am guessing you understand it has no use in diesel fuel but that doesn't meet your argument requirements.

 

You are also off the mark on 40% of the corn crop used for ethanol.  Of that 40% processed by biofuel plants roughly 1/3rd goes into the fuel and 1/3rd goes into feed.  If your assumption was correct even more livestock producers would be crying foul as the equivalent of more than 1.5 billion bushels of corn would not be available as under-priced DDG's.  It bothers me that our own people at USDA have repeated this same lie publicly.  It does no good for agriculture.  For a reasonable discussion, verification of the facts is crucial. 

 

I know you understand all of these points, you just pick what is convenient for a good argument.  You know ethanol was brought about #1 for clean air, #2 to eat up excess supply of corn, and #3 to replace foreign oil.  Those priorities seem to be reversed in the last few years. Reinforcing the original priorities strengthen the argument for inclusion of ethanol.  Air quality standards were never met in the Minneapolis area until just after ethanol was mandated in all unleaded gas.  No coincidence.

 

Both sides of the argument need to grow up and acknowledge the other's valid points.  If ethanol is to blame for higher corn prices, I stand guilty as charged.  We wanted new and diversified demand.  Now it is time for livestock and other ethanol bashers to acknowledge that all of the price increase in corn is not entirely due to ethanol.

 

For the record, I do own shares in a very successful ethanol plant.  I also raise livestock.  Diversity has been key to my success.  I have about had it with individual farmers and commodity groups fighting publicly about food versus fuel and now the Farm Bill.  I understand the importance of free speech; I just wish it were a little more private.  The organizations that don't approve (hate) what we do, need no more ammunition for their campaigns.

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vrbuck
Advisor

Re: Ethanol..........

If one third goes to fuel and one third goes to feed where does the last one third go?  According to your figures 26.4 percent of the total crop doesn't go back to animal feed.  If that is a 13.5 crop,  the total lost bushel is 3.564.

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