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Ethanol Bites You In The Wallet
By Mr Ethanol | June 11, 2007
It may help at the gas pump, but the ripples emanating from the ethanol boom are higher prices for corn, fertilizer and the food on your table. Investors, adjust your portfolios.
MSN Money:
Ethanol is attractive as a solution to high gasoline prices because it promises a free lunch:
* U.S. farmers would grow corn.
* U.S. ethanol companies would turn the corn into ethanol.
* U.S. consumers would go about business as usual.
* And everyone in the U.S. would be less dependent on foreign oil producers.
* But, repeat after me: There is no free lunch.
So far, this not-so-free lunch has resulted in higher food prices and rising U.S. dependence on fertilizers produced by, you guessed it, foreign oil and natural gas producers.
The costs are just starting to work their way through the U.S. and global economies. But it’s none too early for investors to revise their portfolios to take account of the costs of this free lunch.
On June 4, corn (No. 2 Yellow, Central Illinois) sold for $3.77 a bushel. A year ago, the price was just $2.25 a bushel. That’s a 67% jump in price in a year. (The futures markets say prices will stay here, too, with corn for December delivery selling at $3.83 a bushel on June 4.)
Carry on reading: The corn-ethanol price connection.
Topics: Ethanol Prices, Industry, Market |
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