Tuesday, October 24, 2006

Issues Facing Ethanol

More On Ethanol

Forbes has a decent article covering some of the issues ethanol, especially corn-based ethanol, is facing in the US. Public radio's Marketplace also covered the issue in yesterday's show. Ethanol production in the state of Colorado is going to be affected by many of these issues whether it's the sharp increase in production capacity and how that will affect prices to the price of corn going up at the same time we've seen a 20% drop in oil prices.

Sunday, October 08, 2006

Corn Ethanol

A recent story in the Rocky Mountain News talked about corn ethanol production in Colorado. It did a decent job for a newspaper article in covering the issues associated with corn ethanol. A couple of the major issues it didn't raise are that of sustainable farming, more tightly linking food prices with fuel prices and rainfall.

Sustainable farming is a phrase used in regards to modern farming practices in industrialized countries like the United States, Australia, Brazil and others. Many modern techniques have led
to topsoil depletion, groundwater contamination, increasing costs of production, and other problems. It'd difficult to imagine how the lure of profits from growing corn for fuel will lend itself to making major changes to these practices.

The corn industry constantly points out that ethanol production will not affect corn prices. But a quick search at Google News for news with words like "ethanol corn prices" yields a slew of artciles with headlines like "Ethanol production pushes corn prices higher" and articles talking about how the run-up in prices for corn futures during the last year has been driven by increased demand for corn for ethanol production. And this during a time when 13% of US corn crops are used to produce enough ethanol for for less than 3% of the countries fuel needs. What would happen to corn prices if 10% of fuel was derived from corn ethanol? How many crops would be dropped in favor of growing more lucractive corn? How would that affect food prices? How will rising corn prices affect dairy and beef production? What about chicken, turkey and others? It's difficult to see 30%, 40% or more of corn production being devoted to fueling our vehicles without it affecting food prices.

As the original article points out, a gallon of ethanol requires 1,700 gallons of water for production. This is consumed both for growing the corn and also for the production of the ethanol itself. It's needed because corn is essentially a tropical grass. And for areas such as Yuma county that have an annual rainfall of about 15 inches it's an issue because corn requires twice that. This has created a variety of problems including have a large negative impact on the Ogallala Aquifer. It also poses a probelm for the state as a whole. Colorado saw it's population boom including adding a million new people in the 1990s. The population of the state is still growing at a fast clip. Many growing cities have been purchasing farms and ranches for their water rights. It's hard to see how corn ethanol produciton will help restore the Ogallala Aquifer's health, let alone how it won't further exacerbate the water problems facing the state.