IPCC Admits The Scientific Consensus Was Wrong in a Stunning Reversal on Biofuels

It just goes to show you that sometimes, consensus in science amounts to a “whole lot of nothing” as this story from Robert Mendick in The Sunday Telegraph tells us.

Growing crops to make “green” biofuel harms the environment and drives up food prices, IPCC admits in dramatic U-turn

The United Nations will officially warn that growing crops to make “green” biofuel harms the environment and drives up food prices, The Telegraph can disclose.

A leaked draft of a UN report condemns the widespread use of biofuels made from crops as a replacement for petrol and diesel. It says that biofuels, rather than combating the effects of global warming, could make them worse.

The draft report represents a dramatic about-turn for the UN’s Intergovernmental Panel on Climate Change (IPCC).

Its previous assessment on climate change, in 2007, was widely condemned by environmentalists for giving the green light to large-scale biofuel production. The latest report instead puts pressure on world leaders to scrap policies promoting the use of biofuel for transport.

The summary for policymakers states: “Increasing bioenergy crop cultivation poses risks to ecosystems and biodiversity.”

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philincalifornia
March 25, 2014 2:29 pm

rgbatduke says:
March 25, 2014 at 8:31 am
=================
rgb, with respect (a lot), you do have to learn a lot more to be on the cutting edge of this field.
You are correct that ethanol’s characteristics do not lend themselves to being a good fuel. Everyone knows this. There was a time when when 40% of the cost of ethanol was related to separating it from water. Now (in the profitable bioethanol facilities I know well), it’s distilled as the azeotrope and then run over molecular sieves to make it anhydrous. Separation costs have gone way down. Profits are way up (mostly based on the price of corn – as linked somewhere up there, as well as the high demand for DDGs which is cattle food – better than corn itself, as the sugars are not good for the animal’s digestive system). DDGs indirectly, therefore, then give rise to milk and steaks that humans drink and eat respectively, making the food vs. fuel argument even sillier.
The big players in advanced biofuels (Solazyme, Amyris, etc.) are indeed going into diesel as the characteristics of molecules that can be made lend themselves more to this type of fuel. There are though other technologies coming down the pike for gasoline additives (starting with butanol(s)), which will please the auto manufacturers, as they do not want to to budge much in this area.

Walter Sobchak
March 25, 2014 2:52 pm

“Full story (subscription required)”
The way to beat those paywalls, legally, is to use Google. Copy the link location (select, right click and select copy link location in the context menu) and paste it into Google. Google will link the story without a subscription. This technique also works for the NYTimes, WaPo, and FT websites.

rgbatduke
March 25, 2014 6:40 pm

rgb, with respect (a lot), you do have to learn a lot more to be on the cutting edge of this field.
Well, perhaps as a bit of an anomaly, I have absolutely no problem learning from others. My experiences with the problems with ethanol directly come mostly from the other side — it is basically boat-poison for several reasons. If they have some better (that is cheaper) way of extracting alcohol from water than distillation followed by chemistry that’s great.
Upstream there was a comment on the economics of ethanol relating the amount that could be made if 100% of the production of three key grains was diverted to making it. It suggested that even if that were done, ethanol would never produce more than a paltry fraction of our liquid fuel needs, and had some numbers to go with it. Do you have any comment on that? Again, from my own limited experiences producing beer, even if I bought the barley in bulk and could pass the resulting fermented mash through a magic sieve to extract the alcohol with no additional heat at all, I don’t think I’d break even on the cost of gasoline, but I’m happy to admit that economies of scale or less expensive requirements for food grade production and the concentration of the converted sugars could make a difference for corn or other grains.
So, please, feel free to educate me. Ideally with references — the wikipedia article, for example, is chock full of information but it is still remarkably pessimistic about the fundamental utility of ethanol relative to gasoline. There is a rather long list of problems with ethanol production, including unsolved problems (enabling the use of cellulose feedstock instead of far more expensive and less available sugars) and — if one cares about CO_2 as the fundamental motivation (which I don’t, much) — the fact that if one DOES expand cultivated areas to grow new feedstock for ethanol, enough CO_2 is released in the first tilling that it takes a century of production and CO_2 savings to offset it.
OTOH, the idea of producing alcohol directly from algae or other bacteria without an intermediate fermentation step, and the vastly higher yields possible according to at least the hype/claims of the companies trying to develop it is quite attractive, and increases efficiencies and yields by orders of magnitude, so they could — if realized — change everything.
rgb

milodonharlani
March 25, 2014 6:47 pm

A. Scott says:
March 24, 2014 at 3:37 pm
Corn prices naturally affect wheat prices. When corn is too costly, ranchers feed wheat, & different grains can be substituted for in other applications. This isn’t theoretical for me. I was a wheat & barley rancher.

milodonharlani
March 25, 2014 7:01 pm

Dale Muncie says:
March 24, 2014 at 10:46 pm
Human corn consumption in Mexico dwarfs wheat, even with growing use of bread & crackers factored in. As corn has gotten more expensive, however some poor people are eating more wheat & sorghum products.

milodonharlani
March 25, 2014 7:10 pm

A. Scott says:
March 25, 2014 at 10:56 am
A good friend of mine from a well known Oregon political family, now deceased, was a major producer of corn, potatoes & other center-pivot irrigated crops in the Columbia Basin & dryland wheat, peas, garbanzos, etc on the Plateau. He took advantage of subsidies to grow corn for ethanol, but it bothered him to do so, since the process required more energy than it netted. He could however feed the leftover cake to his cattle.

philincalifornia
March 25, 2014 7:18 pm

rgbatduke says:
March 25, 2014 at 6:40 pm
+++++++++++++++++++++
Yeah, I’ll give it a go but just not this evening as I’m kinda busy (with a science project, no less).
I certainly owe you for all the wonderful stuff you’ve written on this board.
In the interim, read A Scott’s stuff. Despite his detractors, he knows this industry well.
Critical issues right now are:
a) The blend wall (it’s difficult to imagine that we’re going to see E20 after the immense hurdle of getting to E15).
b) EPA reducing mandates potentially – big fight going on here.
c) The price of feedstock. I’ve never been able to get my head around bushels and American gallons. Typical corn sugar and Brazilian cane sugar prices are in the 25 – 30 – 50 cents/Kg range (I think today without checking). The promise of cellulosic is to get down to 10 cents/Kg. If this were to happen (and it probably will), it would be remarkable, because in addition to ethanol, many other chemicals currently derived from petroleum could be made less expensively and be way more valuable than stuff to burn in an automobile engine.
Such chemicals would include the vast market-size commodity chemicals used to make polymers. For example, para-xylene, which is then converted to terephthalic acid to make clear plastic bottles – a mere $100 Billion market, and there are other, similar size polymer building block markets.
So you may see that this isn’t all about people whining about starving Africans !!!!
Here’s a link to a technology for potentially making sucrose (a good yeast food) at 5 cents/pound:
http://www.proterro.com/

March 25, 2014 7:51 pm

It’s nice to be shown to be right, as you knew you were all along, while continually being attacked by morons.

Dr. Strangelove
March 25, 2014 8:01 pm

Producing bio ethanol consumes more energy than what you can get out of it. It’s a waste of energy. Using ethanol in your car will decrease your mileage because its energy content is 33% lower than gasoline. It’s more expensive.

Non Nomen
Reply to  Dr. Strangelove
March 26, 2014 1:48 am

Please take into consideration that burning ehanol means also a cleaner burning process and a drastically reduced oil change with cleaner outlet valves. It increases the life expectancy of the engine. And you have a slightly more powerful engine. The mpg goes down by 20% approx./average. To find the individual break-even-point is just some ‘excelwork’.

gnomish
March 25, 2014 8:14 pm

A. Scott
thank you for the satisfying and interesting reply.

philincalifornia
March 25, 2014 8:46 pm

Dr. Strangelove says:
March 25, 2014 at 8:01 pm
======================
Change your screen name to Rip Van Winkle.
Science moves on

Hlaford
March 26, 2014 3:11 am

I can’t find the biofuel conclusions at ipcc web yet. What am I to look for?

rogerknights
March 26, 2014 3:59 am

Here’s a link to a technology for potentially making sucrose (a good yeast food) at 5 cents/pound:
http://www.proterro.com/

It’s also a good algae food. That’s probably why the co-founder of Solazyme has gone to work for Proterro–to help them technically over the hurdles to scaling this up.

Hlaford says:
March 26, 2014 at 3:11 am
I can’t find the biofuel conclusions at ipcc web yet. What am I to look for?

The report won’t be officially released until March 31–this thread is based on a leak to the Telegraph.

A. Scott
March 26, 2014 12:41 pm

milodonharlani says:
March 25, 2014 at 6:47 pm
A. Scott says:
March 24, 2014 at 3:37 pm
Corn prices naturally affect wheat prices. When corn is too costly, ranchers feed wheat, & different grains can be substituted for in other applications. This isn’t theoretical for me. I was a wheat & barley rancher.

Then perhaps you’d comment on this chart ….
http://1drv.ms/OVl6OS
Corn, wheat, soybeans, barley, crude oil and gasoline … that using corn for ethanol must be really powerful to cause ALL those to move together.

Reply to  A. Scott
March 27, 2014 7:07 am

Reduced supply increases, no reduction in demand increases. Corn and Soybeans do not grow together.
In case you have not noticed, the population of the world is STILL increasing.

A. Scott
March 26, 2014 1:14 pm

philjourdan says:
March 26, 2014 at 8:26 am
Sorry Phil, you are wrong. No one is growing them to give away. But when you pay more for feed corn, that means there is less white corn. The price goes up to balance the supply and demand. As it has. That is a fact. It is not speculation.

You make lots of claims about alleged “facts” yet never once offer support for your claims. Sorry, but you show you simply have no understanding of the markets with silly comments like these.
White corn is a tiny fraction of the us Corn market. It has its own supply and demand characteristics. If the demand was greater the farmers would grow more. Period.
The US supplies 100% of the export demand plus 100% of the domestic demand for white corn. It is such a small part of the overall corn crop that even doubling production if there was demand would be all but meaningless in the big picture.
One more time – since you seem to ignore facts you find inconvenient … In 2012:
– 326.32 million TOTAL acres of field crops were planted in the US.
– 97.23 million acres were planted in corn
– 706,234 acres – a tiny fraction – were planted in white corn.
– White corn historically see’s a premium of $.70-$1.00/ bu over yellow corn.
– In 2012 the white corn premium was $.90-$1.90/ bu over yellow corn
Farmers received substantially more money for white corn than for corn used for ethanol or other purposes. If there was additional demand- domestic or export – for more white corn, the farmers would grow it.
White corn acreage is 0.21% of total planted acres. Two-tenths of 1% of ALL planted acres are white corn. Even if demand for white corn was doubled it would not amount to even half or 1% – farmers could EASILY find additional acreage to plant in white corn if there was demand … and most certainly WOULD plant those extra acres due to the significant price premium.
Your simplistic claim that an acre growing corn for ethanol means a reduction in white corn availability is simply uneducated and not supported by real facts.
Perhaps now is a time for you to employ the first rule of holes. When in over your head, stop digging…
https://brokers.intlfcstone.com/Research/Document/DocumentViewPublic/b0c5627c-d091-434e-a936-f79fceb0b9df

Reply to  A. Scott
March 27, 2014 7:19 am

Sorry A. Scott, I am not going to pollute this blog with Econ 101. I stated the facts. Which one of my facts (or all) do you disagree on? We can concentrate on that aspect.
And please note I am NOT quibbling about relative prices. Gold is more expensive than Silver. Does that mean that it cannot go up because it is higher? What kind of logic is that?
Until Man starts farming the moon, the acreage for farming on THIS planet is limited. It is hard to farm the Mohave desert (although parts are with the help of the Colorado River), or Pike’s Peak.
So please, keep the editorial to a minimum, address the issue that troubles you the most, and we can discuss it. Better yet, sign up for an Econ 101 class. I am happy to answer any questions you have from said course.

A. Scott
March 26, 2014 1:15 pm

gnomish … thanks

philincalifornia
March 26, 2014 1:29 pm

Inflation-adjusted corn, wheat and soybean prices since 1920:comment image
Current corn price is around $4.85/bushel:
http://www.quotecorn.com/

A. Scott
March 26, 2014 1:59 pm

Dr. Strangelove says:
March 25, 2014 at 8:01 pm
Producing bio ethanol consumes more energy than what you can get out of it. It’s a waste of energy. Using ethanol in your car will decrease your mileage because its energy content is 33% lower than gasoline. It’s more expensive.

Repeating these completely false claims will not make them so. Perhaps some furious clicking of ruby red slippers might help, but I doubt that as well – they only return you to reality.
For corn ethanol processes the net energy balance of ethanol is at minimum appx 1.6. For every 1 unit of energy expended appx 1.6 units of energy are produced. In a 2008 USDA report the authors – who took into account the entire growing process – found:

A dry grind ethanol plant that produces and sells dry distiller’s grains and uses conventional fossil fuel power for thermal energy and electricity produces nearly two times more energy in the form of ethanol delivered to customers than it uses for corn, processing, and transportation. The ratio is about 2.3 BTU of ethanol for 1 BTU of energy in inputs, when a more generous means of removing byproduct energy is employed.
Some dry mills are already using up to 50 percent biomass power. The energy output for these
plants is near 2.8 times energy inputs, even using the conservative byproduct allowance.

http://www.usda.gov/oce/reports/energy/2008Ethanol_June_final.pdf
Yes, you will get lower MPG using ethanol. Straight gas has appx 114,000 btu/gal. Straight ethanol (E100) has appx 76,400 btu/gal. Gasoline today is E10, which has 110,200 btu/gal. And E85 has 82,200 btu/gal. E85 has appx 25.5% less energy per gal than E10 gasoline.
E85 however has a higher octane rating, which helps slightly. My 2003 Tahoe 5.3 liter flex fuel gets avg appx 14.5 mpg on E10, and appx 12.3 mpg on E85 – or appx 16% lower mpg in real world driving.
In my area – Minnesota – the avg spread between E85 and gas (E10) is 21.8%. Many areas however have a 25% to 31% spread, and I have a 31% station nearby. Even if we use the statistical 25.5% number i come out AHEAD – using ethanol would be more than 5% cheaper, even considering the lowered MPG.
In my actual case however, with real world appx 16% lower MPG, buying for 31% less means ethanol is considerably cheaper for me.
So if we apply actual facts to Dr Stangeloves claim we get:
‘Producing bio ethanol from corn provides at least 1.6 times, and up to 2.8 times, MORE energy than what you can get out of it. It generates considerable more energy than is consumed producing it. Using E85 ethanol in your car will decrease your mileage because its energy content is appx 25.5% lower than E10 gasoline. In the area’s where E85 is readily available the price differential is from appx 15% to 31% making ethanol on a net basis from slightly more expensive to significantly less expensive than E10 gasoline. Ethanol is also cleaner burning, has lower emissions and is a completely renewable fuel.’

A. Scott
March 26, 2014 2:02 pm

But philincalifornia … how could that be? We keep being told by the armchair “experts” it was ethanol that has caused the increases in corn prices. Were there some secret ethanol stills, and huge areas of hidden corn production to feed them, operating in the past we don’t know about?
🙂

philincalifornia
March 26, 2014 2:18 pm

Ha ha. I don’t doubt that there were some secret ethanol stills though during prohibition. Didn’t realize the scale was so vast.
You probably remember a similar thread, probably over a year ago where Gail Combs linked to some interesting machinations by futures traders. Unfortunately (well fortunately actually), I’m too busy to go dig them up.

rgbatduke
March 26, 2014 2:26 pm

If this were to happen (and it probably will), it would be remarkable, because in addition to ethanol, many other chemicals currently derived from petroleum could be made less expensively and be way more valuable than stuff to burn in an automobile engine.
Such chemicals would include the vast market-size commodity chemicals used to make polymers. For example, para-xylene, which is then converted to terephthalic acid to make clear plastic bottles – a mere $100 Billion market, and there are other, similar size polymer building block markets.

I’m well aware of this. One of many reasons that I often agree with at least parts of the “green” agenda is that IMO lots of it makes sense. We have way better things to do with petroleum than burn it. Indeed, one day we will probably bitterly regret burning so much of it, not because of CAGW but because it is the font from which so many useful polymers flow and it is way cheaper to make them from petrochemical stock than to directly synthesize them. Drugs too. Also, many conservation measures are just common sense — there is little point in being wasteful (with a hat tip towards overall economic efficiency still being key). Others are protection of the commons, necessary to avoid the Tragedy of the Commons (see Hardin, G.). Species extinction is also something we need to devoutly avoid wherever possible as we are just entering the age where we are going to be able to realize the true wealth of the world’s genetic inheritance, the product of four billion years of evolution. We haven’t yet scratched the surface of this tabulation of the genomes of the world’s species — we aren’t even sure how many of the latter there ARE yet — and the species that goes extinct next could be the basis of the next great antibiotic, or provide a gene that if moved into a different species altogether transforms it into a fabulous resource, or provide us with a pathway to the biosynthesis of some valuate protein or other molecule. It is also generally unwise to bang too hard, too fast, on local ecologies as evolution needs time to work and we have direct examples of ecological collapse (historically) caused by human activity. Again, protection of the commons from the tragedy of its unregulated exploitation.
So I’d absolutely love to see human civilization move towards a steady state that doesn’t rely on burning scarce, valuable, “mined” carbon compounds to make energy when they are likely to be much MORE valuable in the future for other purposes and when there are obvious substitutes that in even the medium run are going to be much cheaper and cleaner and sustainable for more than a few hundred years. I’m happy to be patient (unlike many greens) and wait for the technologies to become mature and cost effective, but I absolutely support the ongoing research into those technologies and applaud the attempts to make them cost-effective (without subsidy).
The main thing is, I absolutely do not support twisting a weak scientific argument into a shrill cry of inevitable catastrophe to armtwist the human species into racing along this pathway with immature technologies and utterly ineffective measures. I also recognize that the unbridled green agenda can easily be twisted into an anti-human agenda — many “greens” would cheerfully unleash a plague that wiped out 2/3 of the world’s population, I think, as that is the only thing that they think will save the Earth from humanity.
I’ve lived in India where I could see unbelievable poverty out of the window of my house. All poverty is at some level energy poverty — enough, cheap enough energy and one can desalinate, sterilize and transport water, make the deserts bloom, feed a hungry world, and raise the standard of living of the people of the world to first world standards. Without cheap energy, 2/3 of the planet is doomed to remain in poverty for decades or more no matter how well-intentioned or well-directed efforts are to end global poverty.
When standards of living rise, reproduction rates fall. The incentive for war diminishes. The petty arguments over mythological belief (a.k.a. “religion”) and ethics fade into a reasonable perspective as the “punishment” of poverty, disease, misery, hunger, and war fuel conflict. It is a criminal tragedy to take measures that raise the cost of energy globally without even the reasonable expectation that those measures will substantively affect CO_2 levels in the future, let alone without that expectation and with only the weakest of actual evidence that CO_2, left unchecked, will lead to any sort of global catastrophe one half as great as the ongoing human catastrophe tied to energy poverty.
So coming up with biodiesel or E100 solutions with yields of 6000 gallons/acre/year (possibly egregious, but that’s the expectation for one of the ethanol solutions, supposedly), searching for ever cheaper and more efficient PV Solar solutions, searching for the holy grail of high density reusable electrical energy storage, working to engineer our existing knowledge of Thorium-based fission pathways into a meltdown-proof 1000 year energy resource, working to solve the manifold problems of fusion based energy — all of these are just great. Even without subsidy, solar is marginally worth considering in NC as we tend to have hot, sunny summers where a south facing collector could do nothing but run air conditioning for a household during the hottest hours of the day and be considered a definite win as far as annual electrical budget is concerned. I have friends that use homemade biodiesel already, as it too can be cost effective if you have a farm or some source of e.g. used cooking oil. But most of these technologies really need one more good kick in the pants — another factor of 2 to 4 in cost-efficiency — to really make the unsubsidized no-brainer list.
The good thing is, over the next 20-30 years they almost all will, not to save the world but because the companies that profitably bring these things to the consumer table will make piles of money. Big piles. Long term big piles. Fossil fuels are very unlikely to get any cheaper until supply outstrips demand, and the producers are carefully regulating the supply to maintain high prices. Come up with a technology that allows rural NC farmers to produce 6000 gallons of pure ethanol or comparable quantities of biodiesel per acre at a retail price of $2/gallon and that’s $12,000/acre — maybe not tobacco-growing levels of profit but enough that 10 acre or better small farmers can make a decent living, provided only that the amortized cost of the hardware needed isn’t too high.
Sadly, I won’t be around to see most of this resolve. 20-30 years is sort of upper-reasonable bound on my expected lifetime at this point. Perhaps I’ll live to see the CAGW question resolve beyond all doubt one way or the other and to see solar power become commonplace and to see LFTR reactors start to replace coal generating plants, but I have almost given up on seeing commercial fusion in my lifetime. Sigh. Oh well.
rgb

Reply to  rgbatduke
March 27, 2014 10:44 am

@rgb – I think most people here would agree with some of the Green “stated” concerns. The problem is the dishonesty in which they try to achieve their agenda. Declaring CO2 a pollutant is blatantly dishonest. Reducing pollution is a noble and good goal (just look at China now).
The dishonesty is the reason why so many distance themselves from the Green agenda. Plus their careless disregard for human life versus animal life.

rgbatduke
March 26, 2014 2:51 pm

Please take into consideration that burning ehanol means also a cleaner burning process and a drastically reduced oil change with cleaner outlet valves. It increases the life expectancy of the engine. And you have a slightly more powerful engine. The mpg goes down by 20% approx./average. To find the individual break-even-point is just some ‘excelwork’.
…with some re-engineering of the engines. See the wikipedia article on ethanol used as a fuel. It is not without problems, some of them pretty serious. For example, engines with aluminum components in the fuel system are “sad” if used with E10. E10 fuel itself gets to be “sad” if exposed to humid air — it can actually suck enough moisture out of the air to cause phase separation in the gas tank, and (undissolved) water in your gas is a bad thing even as small quantities in solution can help with knocking. There are technical problems (solvable, but they are there and associated with the cost of the fuel) in producing sufficiently “dry” alcohol that it can be added to gasoline without causing phase separation.
I get to live many of these problems with my boat. It has a fuel-water separator in the fuel system, and I just spent several hundred dollars because not only did the separator fill to the max with water, but water got into the internal fuel filter of the engine. No, I’m not pouring water into my gas tank — this is all from condensation, and because I’ve tried once or twice to fill the tank with E10 and add the enzymatic protection that supposedly blocks the hydrophilic action and phase separation — only AFAICT it doesn’t not really. Now I use only real gasoline, no ethanol at all.
Is this “necessary”? Probably not. One could certainly engineer boat motors so that they didn’t contain the aluminum or polyethylene parts that don’t like alcohol. I suppose one could engineer boat gas tanks so that they’d stay internally dry in over-the-ocean warm moist air, although that is apparently not terribly easy as you have to make it POSSIBLE for air to get in to displace the fuel as it operates and the summertime air you draw in is going to be humid and hot and precipitate out its moisture content as winter comes. But these problems are all much less critical for gasoline than for any ethanol mix.
Biodiesel is much simpler. From what my biodiesel using friends tell me, you could go to Harris Teeter and buy a gallon of corn oil and just pour it into the tank and it would work fine. There is apparently a wide range of oils that will “just work” in a standard diesel engine. Sure, they have to be clean, they have to be biologically stable (so they won’t go rancid), they cannot be too saturated — but a car is happy burning olive oil, or canola oil, or corn oil, or recycled, filtered peanut oil from a Chinese restaurant or the oil used to cook french fries at McDonalds. Back when they were still busting people for driving non-tax-paid homemade biodiesel, cops would drive behind trucks and buses and sniff — if the exhaust smelled like french fries, they’d pull you over and test for the dyes added to tax-paid diesel. Sigh.
rgb

Non Nomen
Reply to  rgbatduke
March 27, 2014 10:26 am

I do agree completely with what you said about biodiesel. It can be obtained so easily, just by filtering oil from the chip pan, that it is already becoming rare stuff, occasionally. You can use all kinds of vegetable oil right from the can, if your engine is technically adapted. Financially, just check the break-even-point.
I do agree on ethanol being somewhat peculiar. But I was somehow stunned when the guys from Volkswagen told me that almost all of their cars do accept E10, even those vintage Beetles. If your car accepts E10, it will take even higher ethanol mixtures. I have no problems with a mixture of 4 parts regular and 8 parts E85 under normal conditions. Going long distance at high speed(85 miles per hour and more) requires a tank full of E10 or “better”. I might overcome that restriction using some extra control unit to the injection system that enriches the mixture, but as I normally travel at moderate speed and rpm, this doesn’t pay. So if you have to run the engine under heavy load with E85 you definitely must be careful indeed.
As I’ve learned here, the production of corn for purposes of producing ethanol is no menace to the human race. Those who want to stop making ethanol out of corn etc. should take better care of how much foodstuff they themselves really need and reduce their sqandering. What I consider really awkward is the fact that so much of food for human consumption ends up in the dustbin. The markets will decide if ethanol really pays off.

A. Scott
March 26, 2014 6:37 pm

philincalifornia … its clear to anyone with a shred of intelligence that it is commodities traders and speculators that drive these price spikes and not the corn used for ethanol

Reply to  A. Scott
March 27, 2014 5:31 am

At 6:37 PM on 26 March, A. Scott pantsed himself as an abject cement-head with regard to economics in this non-reply spouting of friggin’ idiocy:

philincalifornia … its clear to anyone with a shred of intelligence that it is commodities traders and speculators that drive these price spikes and not the corn used for ethanol

A concentratedly contrafactual regurgitation of propaganda mouthed only to handwave dirigiste (i.e., aggressively coercive government thuggish) ordination of outcomes in a market function so as to favor politically-“connected” participants at the expense of everybody – and I do mean “everybody” – else in the economy.
Let’s take a first sniff at A. Scott‘s latest shovelful of reeking filth by observing that the participation of producers and consumers in commodities futures trading (a structured form of contractual forward trading) is voluntary, not compulsory. People are induced to become involved in these processes – directly or indirectly – only because they perceive that such involvement is to their advantage.
Absent government goons interfering to “pick winners” according to ostensible political priorities, those whom A. Scott fatuously condemns as “speculators” (his intent to damn them as thieves in one way or another) can only function in any market as their actions prove to serve the benefit of those who deal with them.
As opposed to the normative interferences of government “regulating” commodities trading, these market participants cannot “drive these price spikes” seen in the various segments of the market afflicted by the undeniably contra-economic fuel ethanol boondoggle. Such futures traders – to the extent that they’re good at their job – simply anticipate “those price spikes” and act to facilitate market compensation to mitigate the damages done by extraneous factors, emphasis on the massive government “renewables” malfeasance A. Scott has been shoving around in this forum.
To quote from a very brief article (“The Social Function of Futures Markets,” 19 November 2006) on the subject:

Forward and futures markets are yet another refinement in the growing complexity of a modern financial economy. By distilling the purely speculative aspect out of intertemporal transactions and placing this risk on those who want to bear it, forward and futures contracts foster a greater specialization in the division of labor. Even though the vast majority will never own such contracts, all consumers benefit from the more efficient allocation of resources and production decisions over time.

A slightly longer article (“In Defense of Oil Futures Markets ,” 12 Septemer 2009) also set at the layman’s level is freely available to any honest disputant. There it had been correctly observed that:

…speculators en masse cannot make money by manipulating the prices of commodities by aggressive buying and selling; they can only profit by exploiting spatial and temporal discrepancies in prices caused by exogenous phenomena – events external to the actions of the speculators – that affect the demand for and supply of goods. Speculators who attempt “pump and dump” gimmicks run the risk of being undercut by speculators who have made previous purchases and seek to exploit price differentials themselves by pre-selling other speculators.
Institutional speculators are extremely vigilant economic agents; they are supremely sensitive to changes within the market and since they’re well-equipped with high-frequency trading technology they’re very responsive to market movements and stand ready to react to price signals. This speculative competition makes “pump and dump” contrivances far too risky to prosecute. Thus, (temporal) speculators must yield profits by going through the trouble of forecasting future prices, juxtaposing those expected prices with current prices, and acting accordingly in order to ensure that profits are created and/or losses are avoided.

This author concluded:

We are all too accustomed to the half-witted ridicule that derivatives instruments, in particular oil-derivatives, receive from blitheringly ignorant pundits, academics, and politicians who have not as of yet pulled their heads out of their asses. Let us understand the nature of the battle our comrades in the speculative-derivative trenches wage against mal-adjustments and simultaneously develop the intestinal fortitude to publicly praise their efforts in the face of a most unsophisticated intimidation from Washington.

So much for A. Scott, and therefore to hell with him.

Reply to  Tucci78
March 28, 2014 8:23 am

@Tucci78 – long, but excellent. You said it much better than I. Thank you.

Reply to  A. Scott
March 28, 2014 5:28 am

@A. Scott – Commodity traders? LOL! There goes that old boogey man again. Sorry if I laugh at your paranoia.
“Commodity” traders have to have a supply, and a demand. They merely skim a vigorish off the top. They are no more responsible for the price of oil than sea water is. Short term, they can spike it, but only if there are mitigating factors driving buyers to fear (like a gulf war or a hurricane).
Commodity trading is a zero sum game. For every winner, there is a loser. It is not like stocks where there is nothing real that is traded, just faith. Commodities are real. And so there is a set amount going into the game.
Sorry, that duck don’t fly.

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