Professor Mark J. Perry's Blog for Economics and Finance
Posted 8:37 AM Post Link
Links to this post
Maybe we shouldn't be paying farmers/landowners NOT to plant 30,000,000 Acres?
rufus-that sort of nonsense never seems to come off the books.it went into place at a time when the fear was that productivity growth was crushing farm prices. it's designed as a commodity price support.with ag prices soaring, you'd think this would be precisely the time to cut such a thing. yet, we don't even hear it discussed.there are lots of us food rules like this. it is mandatory to enrich flour in the US. "enrich" means "add calories". this is usually done with highly glycemic starches.this makes all our grain products very high calorie and carry massive glycemic loads.this may have made sense in the depression, but decades into an obesity and diabetes epidemic, it's insane.yet it never comes off the books either.we really ought to write sunset provisions into any program like these that require them to be re upped every 5-10 years.just leaving it on the books is easy, and no one want to upset constituents by canceling gravy trains, but actually having to stand up and argue for corn ethanol again would likely result in its cessation.i suspect that a large percentage of laws on the books in the US would not be passed again if they were re voted today.we really ought to have an automatic mechanism to weed them out.
Morgan, the VEETC (The major ethanol subsidy) Is coming off the books Dec 31st.On the other hand, I really don't think you want to see the gas prices that would result from taking A Million Barrels/Day of Ethanol, and Biodiesel off the market.
Thailand is having success selling casava-derived ethanol or casava chips to China. This seems to be boosting farmer incomes, so that they stay in business and grow food for Thais.
In America, the rural economy and farmers are heavily subsidized, and the "pink shadow economy" seems permanent.In Thailand, farming is pretty much free enterprise. Ethanol is a perfect example--Thai farmers grow casava as there is a market demand for it. In the USA, corn farmers grow corn as the federal government mandates ethanol use. The Pink Economy: Rural America.
"On the other hand, I really don't think you want to see the gas prices that would result from taking A Million Barrels/Day of Ethanol, and Biodiesel off the market."sure i would.i spend more on food than fuel.it would be a net benefit to me and to the economy as a whole.also:taking out the VEETC subsidy won't do much good so long as the blending requirement remains (and tariffs on ethanol imports)that's what we need to get rid of.
Nah, Morgan; you get much more value out of a gallon of ethanol than you would out of a fifth of a bushel of field corn.I say 1/5th because 2/5ths are returned to the food chain in the form of DDGS (and you get 3 gallons of ethanol - plus coproducts - from the remaining 3/5ths bushel.) Your T-Bone has about 2.6 lbs of corn, represented. If corn is up six cents/lb as a result of ethanol, then you're looking at 2.6 X .06, or fifteen point six cents extra. Figuring four T-Bones to the gallon, and the cost of your 4 steaks are up $0.62, total. Your 2 liter of coke is probably up $0.05.Meanwhile, Academic studies show that your gasoline is probably, at least, $0.80 gal (and, you buy how many gallons/wk?)Trust me, it's nowhere near close.
The Tariffs go at the same time as the subsidies, on Dec 31st. Not that it matters; we've been "Exporting" Ethanol to Brazil for over a year, now. In fact, we're the world's Largest Exporter of Ethanol (Unsubsidized.)
The Blending Requirements (RFS2) have to remain, though. For the same reason that the "Break-up" of Standard Oil, and Ma Bell had to remain in place.
That's interesting about Cassava, Benji. You can grow that stuff where you can't grow anything else. And, LOTS of it. Trouble is, you can barely stay alive eating it. Pure starch, and not much of anything else. And, evidently, tastes horrible.I've seen pictures of Starving African Villages with big piles of Cassava sitting out front. A couple of African countries could probably produce enough Cassava Ethanol to fuel the World. And, they're starving.
this makes all our grain products very high calorie and carry massive glycemic loads.this may have made sense in the depression, but decades into an obesity and diabetes epidemic, it's insane.And you may well have been implying it, but the enrichment requirements have probably caused the obesity epidemic.I pledge to vote for the first presidential candidate who vows to eliminate all ethanol tax breaks, subsidies and fuel requirements. If he gets that right, the rest follows logically.
rufus-ethanol is a net money loser.it costs more to produce than it sells for. thus, eliminating it is always going to be a net benefit.corn ethanol does not make any sense at all as a fuel.and it's not just corn it affects. it's wheat, every other grain, soybeans, and pretty much every major plains crop and anything that eats them.ethanol corn has taken away arable land from many crops and driven their prices up too.there is no way to get a net social benefit from diverting farmland to a non economic use.it will always be a loss, and as a society, we will always be better off getting rid of it.and i do not understand your argument about why blending has to stay at all.what does that have to do with ATT and standard oil?
"Nah, Morgan; you get much more value out of a gallon of ethanol than you would out of a fifth of a bushel of field corn"...Well rufus won't that situation change?
Post a Comment
Create a Link
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
View my complete profile