FarmPolicy

February 22, 2020

Ethanol – Market Prices – Ramifications

Categories: Ethanol /Farm Bill

I. Ethanol – Market Prices – Ramifications
II. Farm Bill Issues

I. Ethanol – Market Prices – Ramifications

Edmund L. Andrews reported in today’s New York Times that, “President Bush put on a white coat and visited a laboratory here Thursday to promote his goals for making alternative fuels from switch grass, woodchips and other plant waste.

“After touring the laboratory, which is developing enzymes to make cellulosic ethanol, fuel distilled from plant byproducts, Mr. Bush spoke buoyantly about new technologies that may reduce the nation’s thirst for foreign oil.

“‘Doesn’t it make sense to be able to say to our farmers, grow what you can grow so we become less dependent on oil?’ the president told an audience at Novozymes North America, the subsidiary of a Danish technology company. ‘I like the idea of a president being able to say, wow, the crop report is in, we’re growing more corn than ever before, which means we’re importing less oil from overseas.’”



Corn prices continue to rise (Graph from The Economist Online).

The Times article added that, “Corn-based ethanol is the primary substitute for gasoline, and output is about seven billion gallons a year. But industry experts and administration officials estimate that corn-based ethanol can at most supply only half the alternative fuel Mr. Bush has proposed.”

And in conclusion, today’s NY Times article indicated that, “At one point, Mr. Bush jumped in to explain that corn-based ethanol could not provide enough alternative fuel because ethanol demand was already outstripping supply.

“‘We got a lot of hog growers around the United States, and a lot of them here in North Carolina, who are beginning to feel the pinch as a result of high corn prices,’ he said. ‘The question, then, is how do you achieve your goal of less dependence on oil without breaking your farmers — without breaking your hog raisers?’

“‘Here’s how: You develop new technologies that will enable you to make ethanol from wood chips, or stalk grass, or agricultural waste.’”

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