Do hope everyone has had a great weekend! Was GREAT to see the Saints back in action in a pretty good game in Canton tonight.
Here's yet another article on the issue of the ethanol mandate........
"Pete"
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Our View: It's time for ethanol mandate to go
Corn
prices affect most sectors of our national and local economy
Aug. 5,
2012 |
The recent
upward motion in gas prices is not entirely the fault of the petroleum
industry. It's partly because of the drought that's plaguing much of our
country this summer. That's right, it's related to agriculture -- specifically,
the nation's corn crop.
That's because
since 2005, the federal government has mandated that 40 percent of the American
corn crop must go to ethanol production, for use in the fuel that is pumped
into our motor vehicles. Gasoline prices rose 17 cents per gallon in July, the
largest increase for July in more than a decade. Ethanol itself rose 17 percent
in July, gaining 37.9 cents. Most ethanol is made from corn.
Corn is a
commodity in the United States with intrinsic value because it is found in so
many places. It's used as food, animal and pet feed, in ethanol (by federal
mandate) and, well, it's used in some form in just about anything you can think
of --toothpaste, crayons, paint, medications, candies, yogurt, plastics, paper,
oil drills, preservatives, detergents and even blue jeans. It's transformed
into cornmeal, corn oil, cornstarch and sweeteners that include corn syrup and
high-fructose corn syrup. It's fermented for use in whiskey. Even the waste
products -- cobs and germ, primarily -- have uses. Cobs are used in livestock
feed, as absorbants for oil and other hazardous waste, in insecticides,
fertilizers and as grit for tumbling and blasting. Corn germ is used to make
stronger industrial glues.
Since 1990, the
United States has increased its use of corn-based ethanol by more than 1400
percent, from 349 million bushes in 1990 to 4,900 bushels 2010, according to
the Corn Refiners Association.
Under normal
circumstances, this is all good news for the U.S. economy. America's corn
production eclipses that of any other country in the world; it's more than
double that of China, which is the next highest corn-producing nation.
But in 2012, we
are experiencing normal circumstances. A severe drought is hitting the nation's
corn crop hard, driving price skyward. And that either has or will affect the
prices of all those products.
It's contributing
to an untimely rise in gas prices, as noted above. It also threatens the
poultry industry here on Delmarva, because up to 70 percent of a chicken's diet
is corn. And unlike the corner gas station that can raise and lower pump prices
as the price of a barrel of oil fluctuates, poultry is sold under contract, making
it difficult to account for rising corn prices and remain profitable.
What we have
right now is the equivalent of a perfect storm surrounding the price of corn.
The federal
government mandates 40 percent of the nation's crop go to ethanol production.
But some estimates have 40 percent of the 2012 corn crop already in jeopardy.
If that estimate is roughly accurate and ethanol production from corn was
halted immediately, the supply of corn for all the other uses listed above
would be about the same as in more normal years.
What would this
do the nation's automotive fuel supply? There's no definitive answer, but
anecdotally, some claim the ethanol blend (10-15 percent of the fuel we pump)
reduces gas mileage in most vehicles, even those that are supposed to operate
efficiently using the blend. Smaller engines (lawn mowers, recreational boats
and more) cannot handle the blend and must use pure gas. If using pure gas
increases vehicle mileage by, say, 10-15 percent, we'd be using the same amount
of fuel, but without the ethanol additive. So possibly zero effect.
If poultry
takes another economic hit because of the corn shortage, it will have a ripple
effect across Delmarva that will include lost jobs, higher unemployment and
poverty rates, greater personal financial need and more closed businesses.
Poultry companies
are asking, therefore, that the federal government grant a temporary exemption
from the 40 percent mandate, along with a longer-term solution that would tie
the amount of corn earmarked for ethanol production to each year's crop. If the
net effect of the exemption is cost-neutral on motor vehicle fuels, a smarter
long-term solution might be to scrap the mandate altogether.
The world's
food supply --not a government biofuel mandate --should be the top priority.
And with an expanding demand worldwide for corn exports, U.S. farmers should be
fine with an increasing market demand for their product instead of a government
mandate.
