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Side Effects Of Ethanol Dependency
By Mr Ethanol | June 18, 2007
by Kate “Short Fuse” Incontrera - Daily Reckoning
At the recent Berkshire Hathaway annual meeting, Charlie Munger said, “The idea of cars running on corn has got to be the dumbest idea I’ve ever heard. Dedicated DR readers know that we are of that belief as well…but no matter how we feel about the nation’s misguided reverence for ethanol, the demand for the corn-based fuel is here to stay.
In fact, Congress has been looking over legislation that would require a “36 billion-gallon renewable fuel standard, nearly four times higher than the 7.5 billion-gallon standard required to be met by 2012,” reports the Chicago Tribune. And you can bet that the standard will be met with increased production of ethanol.
One of the obvious side effects of the ethanol craze is that the price of corn has risen 73 percent in the past year - but that isn’t the only food whose price is on the rise. Milk is likely to cost over $5 a gallon in some parts of the country, because dairy farmers have to pay more to feed their cows. And because animal feed with corn in it is more expensive that cost trickles down to chicken, beef, eggs, cheese and - making soda-chugging Americans cringe - high fructose corn syrup.
Consumers are definitely starting to notice that their grocery bill is a bit pricier. Carl Weinberg, chief economist for High Frequency Economics, has warned that higher food prices could spell trouble for the U.S. economy.
“The trend in food prices did not go well in the 1970’s, and we fear that a repeat of that squeeze is in progress now,” he wrote last week.
The amplified demand for corn has also caused farmers to shift their fields to make room for corn, decreasing the supply of other grains, such as soybeans and wheat. Continue reading.
Topics: Ethanol |
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