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Ethanol versus big oil is confusing at best

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Table of Contents:

• I’m in favor of keeping grain prices high enough for farmers to recoup some of their losses from drought and even back to when grain prices weren’t so good.

• However, it would be nice to keep prices low enough and for long enough to prevent driving the livestock industry out of the Southeast.

I understand just enough about the ongoing legal joustings of ethanol versus big oil to be dangerous.

On the one hand, I think ethanol may be helping keep gas prices down, but now gas prices keep fluctuating from nearly  $4 a gallon to below $3.50 today.

I’m in favor of keeping grain prices high enough for farmers to recoup some of their losses from drought and even back to when grain prices weren’t so good.

However, it would be nice to keep prices low enough and for long enough to prevent driving the livestock industry out of the Southeast.

High fuel prices should keep demand for ethanol up and demand for corn good, and subsequently prices should be good. Then again, last time I looked, corn prices were going down as gas prices were going up.

Recently, the American Petroleum Institute and partners decided to appeal the E15 case to the U.S. Supreme Court — now that’s real reason to be optimistic this controversy will end in a way that will somehow help American farmers in general and Southeastern farmers and livestock producers more specifically.

It seems big oil is reluctantly okay with giving up 10 percent of fuel needed to power U.S. vehicles, but not ready to commit to the 15 percent mandated by Congress.

Commenting on the decision to appeal, Bob Dinneen, president and CEO of the Renewable Fuels Association, says “Good luck with that. We now know why gas prices keep going up and up — to fund unnecessary big oil lawsuits to protect their monopoly on the fuel market. I wonder if food prices will spike as well to cover the cost of this Supreme Court challenge?”

I’ve talked to Mr. Dinneen a couple of times and find him to be a reasonable fellow. Certainly, I wouldn’t lump him in with the ‘wild-eyed, spend-crazed liberals’ that he’s sometimes called by the equally irrational extreme right wing conservatives.

Politics being what they are — or how they may be perceived to be, I’m not sure whether the interests of the Renewable Fuels Association and grain growers in the Southeastern U.S. mesh so well with big oil or ethanol.

Ethanol is for sure a good thing for grain farmers in the Midwest. USDA estimates that about 40 percent of this year’s grain crop will go for ethanol production. Some contend the high price of corn, mandated by use as ethanol, is good for all corn growers. That may be true, but in recent reports by the Renewable Fuels Association, it’s clear a vast majority of the profits from ethanol production stay in the Midwest.

The numbers for ethanol production seem staggering when placed beside the demand for corn for Southeastern livestock producers. In the last week in March, ethanol production averaged 805,000 barrels per day (b/d) — or 33.81 million gallons daily. That is down 4,000 b/d from the week before. The four-week average for ethanol production stood at 804,000 b/d for an annualized rate of 12.33 billion gallons.

Discuss this Blog Entry 1

Bobby Fontaine (not verified)
on Apr 23, 2013

ethanol does not keep gas prices down, ethanol cannot compete with cheap oil so speculators are allowed to bid up the price of oil to unrealistic levels to give ethanol a foot in the market,, watch what happens to oil prices when ethanol use ends, the dollar will strengthen because it will no longer be dragging ethanol around like a ball and chain locked to its ankle, the price of food will start to fall back to reasonable levels because we will start eating it again instead of throwing it away making pretend fuels out of it, and speculators will not trust the CFTC to keep turning a blind eye to their abuse of commodities markets anymore, boom, the economy will be fixed

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