20 May 2008

Biofuels are Part of the Solution, Not the Problem

Hugo Chavez, dictator of Venezuela, is at the forefront of the war against biofuels. How pleased the blubbering fool must be that so many journalists and politicians of the developed world have joined him in condemning one of the best approaches to reducing dependency on oil tyrannies.
At bottom, the entire food versus fuel argument boils down to a Malthusian conceit—that there is only so much that can be grown, so if we grow more of one thing, we must necessarily grow less of something else. But this is simply false. Agriculture is not a zero-sum game. As illustrated in the bar chart below, there are roughly 2,250 million acres of land in the continental United States. About 1,600 million of those acres are arable. Roughly half of that land (800 million acres) is farmland, but only about a third of that (280 million acres) is actually being cultivated. Only about 85 million of those farm acres are presently growing corn, and just a fifth of that land—about 17 million acres—is growing corn that becomes ethanol. In short, there is plenty of farmland in the United States that could be used to grow more corn—or more of the other staple crops needed to meet domestic or international demand. Even more importantly, agricultural technology is constantly advancing. U.S. corn yields per acre have risen 17 percent since 2002, and the state of Iowa alone today produces more corn than the entire nation did in the 1940s. Applied globally, such improved techniques can multiply world agricultural yields many times.

...the two primary reasons for higher food prices are, first, higher demand, and second, higher fuel prices. The increased global demand for food ought to be seen as a very good thing: it represents hundreds of millions of people, especially in China and India, rising out of poverty and moving to more calorie-rich diets. Escalating fuel prices, however, are not good news: they drive up the cost of everything we eat. For example, consider the $3 box of cornflakes you might see in your grocery store. Farm commodity prices basically have a trivial effect on its price. A bushel of corn contains 56 pounds of grain, so at the current “very high” commodity price of $5 per bushel, a pound of corn costs 9 cents. So the 16 ounces of corn in that cereal box cost a total of 9 cents when bought from the farmer. But when the price of oil goes up, that increases the cost of production, transport, wages, and packaging—all driving up the retail cost of food.

And, in this regard, biofuels have already done more good than harm to the world’s poor. According to the Wall Street Journal, “Global production of biofuels is rising annually by the equivalent of about 300,000 barrels of oil a day. That goes a long way toward meeting the growing demand for oil, which last year rose by about 900,000 barrels a day.” The paper cites a Merrill Lynch analyst who “says that oil and gasoline prices would be about 15 percent higher if biofuel producers weren’t increasing their output.” So even though the world’s biofuels industry is still just aborning, it has already begun to bring down oil prices. __NewAtlantis
Oil prices are kept artificially high specifically by the actions of governments. Governments such as Russia, Saudi Arabia, Venezuela etc. are oil tyrannies and push prices high for purposes of dictatorial survival. Governments such as the EU and the US push prices of oil, coal, and gas high out of the quasi state religion of CAGW, and other misguided policies.

Bioenergy is one of a constellation of sustainable solutions to the onerous dependency upon dictatorships for the energy of everyday commerce, transportation, and industry. It makes sense for Hugo Chavez to scapegoat bioenergy. What about you?

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Blogger Ugh said...

Al - as I read more on this subject (here and elsewhere) I am realizing the economic poison that is high oil costs and that bio-fuels, even ethanol for that matter, is not what is causing the grocery store blues. Higher demand that inevitably comes about when poor societies begin to move up to middle class societies is the culprit.

It just goes to show you how well propaganda works on the uninformed. (and I read a lot!) In a round about way we actually should be happy that more and more people on this globe are eating better than ever in human history. The real lesson is that as the globalization of world-wide capitalism lifts all boats we have to expect rough seas...

Wednesday, 21 May, 2008  
Blogger al fin said...

Yep. High oil costs are ripping up the economic landscape like a tornado through an English garden.

The natural price of oil right now is about $80 a barrel, given supply and demand.

Wednesday, 21 May, 2008  
Blogger Athena Andreadis said...

If anyone wants to the connections between oil, corn and ethanol (presented very eloquently and persuasively), read Richard Manning's Against the Grain: How Agriculture Has Hijacked Civilization.

David Pollard gives a good synopsis of it in his Salon blog, The Devil's Bargain. Manning himself wrote a briefer article on this topic in Harper's Magazine, The Oil We Eat.

Thursday, 22 May, 2008  
Blogger al fin said...

Athena: Interesting reading. I certainly agree with Pollard's bullet list at the bottom of his piece.

Manning is an interesting soul. I would not go to him for balanced data on anything important, but he contains a lot of poetry--rich poetic imagery.

Thursday, 22 May, 2008  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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