Global Food Prices Jump To Record Level Because of Higher Corn Prices – or the alternate title: Cornholing the future
There’s lot of gloom and doom being pushed, trying to link food prices to climate change by the usual howlers. As shown above, food prices surged to record levels in February despite February wheat and rice prices being essentially flat. Yet, February corn prices are up significantly even with 2010 being the 3rd largest U.S. corn crop ever. Why? Well part of the reason is that our cars now have a mandated, growing and voracious appetite for corn based ethanol.
Dr. Roger Pielke Jr. writes:
When certain information proves challenging to entrenched political or ideological commitments it can be easy for policy makers to ignore, downplay or even dismiss that information. It is a common dynamic and knows no political boundaries. Global Dashboard catches the Obama Administration selectively explaining the causes for increasing world food prices:
“The increase in February mostly reflected further gains in international maize prices, driven by strong demand amid tightening supplies, while prices rose marginally in the case of wheat and fell slightly in the case of rice.”
“In other words, this is mainly about corn. And who’s the biggest corn exporter in the world? The United States…And where is 40% of US corn production going this year? Ethanol, for use in US car engines.”
So here we having wailing and gnashing of teeth by the usual suspects over global food prices, and they are using this as an example of the supposed “climate change drive food prices” link. Of course there isn’t any link in this case. It’s the corn stupid.
The simple solution: stop burning food for fuel, drill for more oil, work on alternate energy system that actually might work, like thorium based nuclear power.
h/t to C3 headlines
Wow, I go out for supper and a real debate in an areaI actually have some expertise in breaks out. Fortunately Hotrod and 220mph have covered all my thoughts pretty well so I won’t cover that ground again… So I will try to cover a couple points that didn’t seem to attract much attention.
Engines built and used in the US are for the most part very long lived. Ethanol just doesn’t make any difference at all in the life of a 4 cycle automotive engine. Engines today are so clean and tight that the engine rebuilding business has been reduced to a mere shadow of what it was 15 years ago. If it wasn’t for racing most of the remaining shops would only work on heavy duty engines, there is just no demand for rebuilt automotive engines. Why is this? In a short version, the EPA is primarily responsible for automotive companies building better engines. Its all about emissions from the tailpipe so the car companies had to build ever more tighter and therefore cleaner engines.
Engines fail from DIRT, not ethanol. If you want proof of that just look at the differences in manufacters suggested oil change intervals. 25 years ago almost all cars required a oil change after 2500 miles. Todays vehicles can easily run 7500 to 10,000 miles between changes. Even at that point synthetic oils could go further but the antiwear additive ZDDP is pretty well gone and needs to be replaced.
The complaints about 2 cycle engines having problems with ethanol mixtures have some truth, but in my experience its usually multiple issues. When the EPA required that all gasoline in the US be reformulated one of the ways this was accomplished was by changing the RVP (Reid Vapor Pressure) , which meant that cold running motors like 2 cycle engines wouldn’t start properly. This could be fixed in some engines by the use of hotter spark plugs, but the results have been mixed. It appears the “shelf life” of gasoline is the main issue with most small engines because they are much more sensitive to gas that might be starting to lose its volatility. Ethanol might be a factor in this but I have not seen any technical papers on 2 cycle engines discussing this issue.
To all of the posters here who are jumping to the conclusion that somehow making corn into ethanol is causing people half way around the world to starve, one thing in all this is certain. We have plenty of corn. What we don’t have is political stability in countries where people are starving. Fix that and the food problem will be fixed too.
Lastly, I do live and work in corn country. I’m in the automotive business and do obtain a fair amount business from farmers and the various support industries that surround farming. My business is such that it doesn’t really matter too much if corn is at $3.00 a bushel or $10.00. A few of my customers and friends work for the big seed companies but mostly could care less if corn goes into ethanol or cows. Enough said.
hotrod ( Larry L ) , “If the ethanol subsidies ended tomorrow morning with no notice, the same thing would happen to the ethanol industry as happened to the oil industry when the Arab oil embargo doubled the price of their commodity overnight in the 1970′s. In any industry the market is based on the existance a specific financial environment. If you yanked that rug out from under any industry you would crash it.”
Yes all subsidized industries crash when the subsidies are removed because they were never economically viable to begin with that is why they needed the subsidies.
“Now the second part of your question is the key issue, — yes ethanol can survive without the subsidy, now. The reason it needed the subsidy is two fold, one all the stupid crap info out there that is not only incorrect but in many cases exactly opposite of the facts, an the damage done by government intervention in the fuel market in the 1920′s that destroyed the fuel ethanol industry, so it was starting up at a severe handicap that would not have existed if the government had not been meddling in the first place.”
That is the biggest pile of BS I have ever read. Ethanol fuel was not banned in the 1920s, it could still be used in a denatured state. Even still so the U.S. Government destroyed the ethanol industry worldwide for over 75 years? Every country on the planet is just stupidly refusing to use Ethanol? How come the ban didn’t destroy the Alcohol industry? It recovered completely, yet the Ethanol industry just could not recover in over 75 years?
“The current subsidy is simply long overdue compensation for that government intervention in the markets and the 50 year head start the oil industry had with no viable competitors after the fuel ethanol industry was shut down by the government.”
How did the automotive industry beat out the horse and buggy industry in the U.S. with its over 100 year advantage?
“Fuel ethanol blended with gasoline would be the preferred fuel if the average person on the street was not up to his eyeballs in bad information about ethanol and really understood that when blended with gasoline, is a far superior fuel to gasoline alone.”
Oh really? So consumers are just idiots and are “imagining” reduced MPG and driving ranges?
“That is why today the high performance community is falling all over itself to do conversions to run E85 today, it out performs $6-$10 per gallon racing gasoline.”
Consumers don’t fill up on racing gasoline or methanol either because their sole reason for driving a car is not to win a race at over 200 MPH on a racing track.
Lots of good debate and conflicting information. Yet some things are clear.
Many farms have converted to corn for fuel.
Water, and farmland is a precious resource, and corn for fuel creates more demand for both, and is therefore inflationary on all foods.
CO2 at 390 ppm grows corn, wheat and soy, about 12 percent more efficiently then at 280 ppm. (CO2 is a blessing here)
The Obama stimulus is inflationary.
The growing wealth of China and India is also inflationary on food prices.
Food supplies are on a shorter string then they used to be, and reserves are not as great.
The subsidies, if removed, may or may not kill corn for fuel. It is time to find out.
“Boy this red herring nonsense gets old — the corn used for producing fuel ethanol (field corn) and is not “food for human consumption” it is an industrial crop like timber, alfalfa, cotton etc.”
When a person makes starts off with deceptive statements like that, you only expect it to go downhill from there. Ethanol corn often is the very same corn used for human consumption (as cereal, corn syrup, flour, starch, etc), and it is always the same land (and water and fertilizer) as used for food crops.
“The modern fuel ethanol industry grew up out of the oil shortages of the 1970′s because ethanol allowed them to stretch a limited supply of oil/gasoline.”
Nonsense. The modern fuel ethanol industry grew out of recent massive subsidy and mandates.
“Fuel ethanol is a direct replacement for imported oil, and its percent of use goes up as costs of oil increase. That is a classic increase of demand for a substitute product when the item it replaces becomes cost prohibitive.”
Nonsense. If that were the case, there would be no need for massive subsiby and mandated use.
“It is very simple economics, …”
It is very simple economics that if something is cost effective, it doesnt need to be subsidized. It is simple economics that if something is higher performing, it doesnt need to have its use mandated.
“Fuel ethanol is the most cost effective octane enhancement for gasoline blending, it allows them to use less crude oil to make a gallon of fuel, therefore as the price of oil goes up, so does demand for fuel ethanol to allow the blenders to meet minimum octane requirements at the lowest possible cost.”
If that were true, it wouldnt need massive subsidy and mandates.
“It is a safe bet that this years corn plantings will be going up substantially for the same reason, as increased fuel costs will improve profit margins on fuel ethanol.”
Profit margins artificially enhanced with massive subsidy and mandates.
You admit that if the massive subsidy and mandates were removed, the ethanol fuel industry would collapse. Industries producing a more cost effective and superior performing product don’t need taxpayer subsidy and government mandated use.
JJ
What a load of utter rubbish from Hotrod and 220mph. They are trying to get around the fact that you cannot divert 40% of the corn crop from the largest producer of maize in the world and that it will not have a large effect on global food supply and price. Talk about ignoring the elephant in the room.
Kinda interesting logic isn’t it?
Prediction: global warming will cause crop failure, mass starvation, we must fight AGW.
Action: Convert food crops to fuel. Clearly, facing crop failure and mass starvation, the obvious strategy is to burn the food.
Observation: Food prices are going up. This is proof of global warming.
Question: I thought global warming was supposed to cause crop failure, mass starvation….and now prices are rising so that’s proof of global warming?
Discussion: Let’s skip the ethanol vs regular debate. I’d like to know how the ChickenWarmingLittles managed to go straight from “price” to warming. What about the intermmediate steps? Like showing the crop failures that were caused by warming, showing the reduced yields caused by warming, that then result in higher prices.
But no…all the headlines for some time now regarding crop failure have been from cold…frost…early snow… yet in those areas where temps have been normal or above normal…highest crops yields in history.
But I guess there’s no need for logic. Should have figured that out when John Q Public got duped into staving off food shortages by burning the food.
Alan Simpson says:
March 5, 2011 at 3:49 pm
“I was going to say the greens/alarmists/UCS and the rest were economically illiterate, now I am not so sure. It may be a genuine effort to kill as many people as possible.”
I think that Alan’s comment has merit. How so? Environmentalists come in a variety of different flavors. A few of the categories include:
•1960s conservationists/preservationists, including yours truly;
•NIMBY types, who are mainly interested in the market values of their houses;
•fast-buck artists, like His Goreness;
•clueless men, who wrap themselves in the Care Bear environmental banner, hoping that it will help them get laid;
•True Believers, aka useful idiots, who desperately need a glorious cause to give meaning to their empty lives;
•population alarmists, like John Holdren, who either don’t know or don’t care about the Demographic Transition;
•misanthropes, who believe that Nature is always good, and that people are essentially bad.
Misanthropic environmentalists view economic sabotage as being virtuous in its own right. The first and most obvious category of Green economic sabotage is unlawful action. Example: vandalizing a coal-fired power plant in the UK.
The second strategy of Green economic sabotage is to work within the system. Get elected to public office. Or work one’s way up through the ranks in the government bureaucracy. Then when one gains a sufficient amount of power, do as much damage as possible, while covering one’s posterior.
Greens in Australia have been relatively successful in working from within the system. Green environmental policies contributed to the death toll of the 2009 Bushfires in Victoria. Homeowners, who lived in the eucalyptus forest there, were not allowed to clear away these highly flammable trees a sufficient distance from their houses.
When Black Saturday came, there were spot-fires miles ahead of the main fires. One minute, all appeared to be well. The next minute, there was a rapidly-approaching wall of flame coming from all directions, from which there was no avenue of escape, and no safe haven. Many of those who obeyed the law were burned alive.
I followed the discussion about this on Jennifer Marohasy’s blog, and was absolutely appalled at the attitude expressed by one of the local Greens: If you get killed in a bushfire, it’s your fault. That’s the old blame-the-victim game.
I don’t know if Australian Greens are more misanthropic than their American and European counterparts. It may simply be that the Australian Greens are more out-of-the-closet about it.
What about the maize-based ethanol subsidies? Almost everyone knows that that policy is dreadfully uneconomic, and that there are no energy savings. Here are a few possible motivations:
•improving air quality in urban areas, since low concentrations of oxygenated fuel additives–like ethanol–decrease carbon monoxide emissions;
•both political parties attempting to buy votes in the swing states of the Corn Belt;
•starving out redundant people in developing countries, because it’s supposed to be ‘good for the environment’.
Alan’s brief comment may turn out to be spot-on.
I would ask everybody to look at the numbers first, and then try to discuss them:
http://www.dailyfutures.com/one/grains.html
My take is, the increase in fuel conversion was more or less compensated by increased corn production.
If there is a shortage, it is probably not (yet) the availability of land, but (I speculate) more the availability of farmers. Many of them have given up during the 30 years of non increasing corn prices and their average age in the US is now 58 !
davidmhoffer says:
March 5, 2011 at 11:49 pm
nice post, I would LOL,if it were not so damm serious.
Here is an interesting article in the UK Telegraph relating the current increase in food prices world wide to among other things the increase in ethanol use
“Gloomy Malthus provides food for thought as world’s appetite builds”
http://www.telegraph.co.uk/finance/comment/liamhalligan/8363500/Gloomy-Malthus-provides-food-for-thought-as-worlds-appetite-builds.html
Excerpt “Accounting for 2.5pc of global energy use, biofuels are now serious business. Boosted by huge Western government subsidies, they’re set to meet more than 10pc of global energy needs by 2030. The trouble is that biofuels are shifting land use away from crops for food – which, in turn, is pushing food prices up. The extent of this land shift is uncertain. But a recent Friends of the Earth report said that in Africa, the European-led biofuels land-grab is “under-estimated and out-of-control . . . causing conflict and threatening food-security”. So even mainstream environmentalists now feel that biofuels, designed to lower our hydrocarbon addiction, are actually counter-productive given their impact on food. ”
The issue is receiving attention in serious mainstream papers here in UK. One wonders if politicians will see the light at well.
danj says:
In addition to ethanol driving up food prices, the fertilizer runoff from all the Midwest acreage planted for ethanol creates a dead zone in the Gulf of Mexico each summer that covers thousands of square miles. We are mandated to subidize and use ethanol for a “cleaner” environment. In the process, we do as much harm to the Gulf as the BP oil spill. This doesn’t make sense.
No subsidies, no mandates. Make ethanol compete in the market place and see how much consumer demand it drives…
Good grief people – use some common sense – think for YOURSELF before you pass these kind of judgments …
One of the biggest attacks is that nasty old corn for ethanol is displacing that land from growing food … in other words THEY ARE GOING TO GROW corn regardless – and that means they are going to irrigate and fertilize … having exactly the same effect
Sorry, but not only does this claim have little or no basis in reality – but it is simply silly …
Poptech says:
March 5, 2011 at 8:58 pm
Larry, “It is biologically natural and benign easily decomposing if spilled. There is no other readily available chemical that can do what it does for the cost.”
It has it’s own problems if the spill catches on fire,
Ethanol has fueled Indycars for several years … there are occasional fires during wrecks and in pit incidents … like methanol, the prior fuel of choice, ethanol fires in Indycar are fought largely with water
And again I have to say comparing a tanker of ethanol on fire with a tanker of gasoline also seems silly to me … neither is a fire that can typically be “fought” – if fully involved the best a fire dept could do in either case is let it burn and try to minimize collateral damage
What about pictures of oil prices or other raw material prices?
Hockeysticks everywhere I look 😉
The green regime is full of well intentioned Pol Pots.
It seems the cruelty of do-gooders knows no bounds.
Corn prices were on the floor a year ago, no agri commodity has kept pace with inflation over the last ten, twenty, thirty years. The farmers % of the final price has been falling consistently for over half a century. If food was in short supply this would not be the case. Europe, US and other developed economies are net importers of food purely for economic reasons. We suck calories out of regions of the world not feeding their own people. Flowers for European tables are grown in Uganda.
150 years ago Ireland exported food while millions starved, nothing has changed. There is no shortage of food, only a global economy that has not factored in the limitations of capitalism on international food security. Speculation on food commodities is immoral, lack of global policy on food is as short sighted as is the nonsense of a global climate change policy.
CharlieFFoxtrot says:
To us, it means higher taxes, higher fuel costs, lower mpg, higher fertilizer prices/usage, more water use and water pollution, thousands of trucks of flammable liquids on the roads (you can’t transport it in pipelines), and fire like the one in Ohio recently when a trainload went up.
However, to poor nations that can’t afford as much food for their people, it means more people starve. It is especially critical this year because of crop failures in various places. There is apparently no surplus, so prices jump. It needs to stop now, even if it ends up costing some bucks. We already spend too much on this fiasco. Lets admit it’s stupid and stop it now.
Again – factual claims NOT supported by data …
Higher fuel prices? …. nope
Ethanol, even E85, costs LESS – not more – than gasoline – per e85prices.com the national avg is $2.90 for e85 and $3.48 for gasoline (E10) – a 16.6% savings
In my area I pay $2.59 for e85 and $3.38 for gas (e10) – or 23% LESS for e85 … this trend largely holds for areas where e85 is prevalent
Lower MPG? …. nope – red herring
Direct MPG is lower with e85 – which makes sense since e85 has lower energy content. But energy content is not the only measure – vehicles designed for flex fuel take into acct the properties (higher octane etc) of e85 fuel and offer greater efficiency than conventional gas fueled engines.
Again – My 2003 Tahoe flex-fuel gets appx 14.7mpg City normally on E10 gasoline, and avg. 11.9mpg on E85 – a real world difference of just 19% …
E85 is 23% less than gas – yet my mileage is only 19% lower … I get a NET GAIN in actual fuel economy on a cost per mile basis with E85.
Higher fertilizer prices/usage? … outright false
First, FEED corn which is used for ethanol uses far less fertilizer (and water) than FOOD corn …. Second, again – the big complaint is that land is being used for growing corn for fuel instead of growing corn for food – the land has corn grown on it either way and fertilizer and water is used – again, FOOD corn has significantly HIGHER fertilizer (and irrigation) requirements than feed corn used for fuel
More water use and water pollution? …. and false again
Ethanol production does use water – but not dramatically more than other energy sources. And ethanol plants have dramatically reduced that water usage by using onsite treatment and reusing much of the water:
Interesting thing that water use – when you look at perspective:
WATER USE Ethanol vs Gas vs Electricity:
1 gal unleaded contains 119000 BTU
1 gal ethanol contains 76000 BTU
1 kwh elec contains 3413 BTU
1 gal ethanol takes 4.00 gals water
1 kwh elec takes 0.60 gals water
1 kwh elec takes 0.75 gals water (Nuclear)
1 gal gasoline takes 3.50 gals water
1 gal cellulosic takes 6.00 gals water (biochemical process)
1 gal cellulosic takes 1.90 gals water (thermochemical process)
Ethanol creates usable, high value byproducts which consume appx 35% of water used and as such a portion of water use should be allocated to production of these byproducts:
1 gal ethanol takes 2.60 gals water (less byproducts use)
1 gal cellulosic takes 3.90 gals water (less byproducts use) (biochemical)
1 gal cellulosic takes 1.24 gals water (less byproducts use) (thermochemical)
=BTU per gal water 19,000 ethanol
=BTU per gal water 5,688 electricity
=BTU per gal water 4,551 electricity (Nuclear)
=BTU per gal water 34,000 gasoline
=BTU per gal water 12,667 cellulosic ethanol (biochemical)
=BTU per gal water 40,000 cellulosic ethanol (thermochemical)
after byproduct water use credit:
=BTU per gal water 29,231 ethanol
=BTU per gal water 19,487 cellulosic ethanol (biochemical)
=BTU per gal water 61,538 cellulosic ethanol (thermochemical)
After properly crediting for byproduct value – even current ethanol production – which is pretty inefficient – is comparable to gas for water use – and future thermo technolodies make cellulosic biomass almost twice as efficent as gasoline for water usage
If we are basing viability of energy generation on water use we should abandon electrical power plants immediately as they are horrible water wasters – and nuclear plants are worse yet … but we do not – because there are offsetting factors
You can’t transport it in pipelines? …. simply false
You CAN transport ethanol thru pipelines – they are used in Brazil and several are proposed or in use in the US. In large part however pipelines are not necessary as the plants are located near the feedstock and the ethanol produced is consumed locally as well
Fire!? …. another red herring
A tanker of gas or a tanker of ethanol on fire – no effective difference – except that ethanol is less likely to explode than gasoline … neither can be “fought” effectively – they can only be contained and allowed to burn out
Poor nations that can’t afford as much food for their people? …. true – but completely unrelated to ethanol
US corn production meets ALL of the domestic food, feed and ethanol demands … PLUS ALL of the EXPORT demand – and there is still grain left over … these country’s could ask for more and we would have it to sell them – using corn for ethanol is NOT reducing availability of corn for food …
Schadow says:
In the southern US, cotton used to be the major cash crop. So much cotton production has been diverted to corn that cotton is commanding high prices not seen in many years. Has anyone seen the little article (probably in the back pages of your favorite birdcage liner) that clothing prices are rising apace?
Unfortunately, according to the USDA – that claim is inaccurate as well.:
2010 cotton production is up 50 percent from 2009, at 18.3 million 480-pound bales. The U.S. yield is estimated at 821 pounds per acre, up 44 pounds from last year’s yield. Harvested area, at 10.7 million acres, is up 42 percent from last year.
C’mon people – please educate yourselves – go look for the facts yourself – and stop believing (and repeating) what other biased sources tell you … you can get this info directly from the USDA site under crop reports
CNY Roger says:
Hotrod (Larry) can you explain this defense of ethanol in the link in your post March 5, 2011 at 5:00 pm :
Jere White, (Executive Director of the Kansas Corn Growers Association and Kansas Grain Sorghum Producers Association) claims that: “The fossil energy input per unit of ethanol is lower—0.74 million Btu fossil energy consumed for each 1 million Btu of ethanol delivered, compared to 1.23 million Btu of fossil energy consumed for each million Btu of gasoline delivered.”
no idea who this guy is or where you got this statement – but it is simply false
All you need do is search “ethanol net energy yield” on Google and you will find the current information … which will show the typical net energy yield for ethanol from corn is appx 1.5 to 2 units units of energy created for every one unit expended in production … these numbers continue to climb …
But the real improvement will be cellulosic ethanol processes – which are currently about double the corn yields and could see net energy yields as high as 8 to 1 in foreeeable future
Sorry Roger – its late – my apologies … on a re-reading the statement is accurate …
0.74 units of energy consumed for each 1 unit produced = 1.23 to 1 net energy yield … more ethanol energy is produced than energy is expended to produce it …
That statement is apparently from the following:
Attached was a summary of an Argonne National Lab report written by Michael Wang, who initiated the following claim (from the report):
As you can see, the fossil energy input per unit of ethanol is lower–0.74 million Btu fossil energy consumed for each 1 million Btu of ethanol delivered, compared to 1.23 million Btu of fossil energy consumed for each million Btu of gasoline delivered.
The 2nd part about gas is also in that report … and the simple math there shows with 1.23 units of energy consumed to produce 1 unit of energy in gasoline the net energy yield of gasoline = 0.81 to 1
Your question/comment is correct …
Colin says:
What a load of utter rubbish from Hotrod and 220mph. They are trying to get around the fact that you cannot divert 40% of the corn crop from the largest producer of maize in the world and that it will not have a large effect on global food supply and price. Talk about ignoring the elephant in the room.
sorry – the “load of rubbish” as you put it, is from folks like you who make unsubstantiated claims with no documentation or support …
If you have factual support for your claim please provide it and we can discuss … others here have done that – your turn …
Apologies if this has already been posted, but my impression was that a main reason for corn production for ethanol was to encourage the use of marginal farmland that was under utilised. As such it should have had less impact on taking land out of food production.
http://www.farmgateblog.com/article/1311/will-the-2011-corn-crop-be-large-enough-to-fill-the-demands
“…Our supply of corn at the end of the marketing year will be the equivalent of three weeks of use, but what happens if the 2011 crop also falls short of our needs?”
hotrod ( Larry L ) says:
March 5, 2011 at 6:39 pm
“It is a naturally dry fuel that will never let enough water collect in your tank that you will have fuel line freeze in subzero weather.”
This is not my experience. Ethanol is what we used to call “dry gas.” Yes, if you add it to your gas it will take care of a few drops of water in your gas, but if there is no water in your gas it still wants to attach itself it H2O, so it sucks the moisture from the air.
This is not a problem if you use the gas up quickly, refilling your tank every few days, but if you run a lot of small equipment (as I do) such as roter tillers, chainsaws, snow blowers, wood-splitters and so on, you have to be careful because the gas “goes bad.” It sucks too much water from the air, if it sits around. I actually have had to throw away gas, and drain tanks. The ethanol-gas mix goes bad in 3 months in the coldest weather, and in only six weeks in humid summer weather. (You can add a “fuel stabilizer,” but who needs that extra task, and Lord only knows what is in that -bleep-.)
Add to this the fact ethanol-gas mixes run too hot in 2-cycle engines, so you need to add more oil to the gas and run a smokey blend, (and even then your older equipment tends to burn out piston rings even though it had no problems in ten years, before ethanol,) and you can see why landscapers and small farmers hate ethanol. If they increase the amount in the gas any more a lot of equipment will be basically useless.
It is just another case of the little guy getting screwed. I don’t see why they can’t offer the option of gas-without-ethanol. I’d buy it, even if it cost more.
Hey … Obama is cornholing the future ….
It’s not about the corn it’s about using the famland for the thing that produces the highest government subsidy.
Did you know that you can make liquid transport fuels from coal at about $30 a barrel equivalent? Fischer-Tropsch is it’s name, invented in the 1920s. Used by Germany in WWII … and now being installed in China as state of the art refining plants.
Whatever reserves one may have about the title of Anthony’s post, there is no doubt that it has led to some fascinating comments both for and against (for the moment I remain neutral on that point). I had never heard about the effect of Prohibition on the elimination of alcohol from vehicle fuels (and thanks to Larry L for that titbit). I also wonder about the sources for alcohol high-performance additives.
When I first came to France in the 1960s, they still had many of the old buses with the rear balcony. They filled the streets with a characteristic pungent odour that apparently came from the their fuel, a mixture of equal parts gasoline, alcohol and what I have seen described as benzol. (I have also heard of castor oil being used).
The point about ethanol by-products being adapted for animal fodder is also an interesting one — and conversely what food by-products can serve as fuel sources?
I don’t see any problem with government subsidies for launching innovative technologies for limited periods so long as they don’t turn into permanent crutches.