A Corny Story

Nice commentary on a still-undercovered issue.

Is this really all about Biofuels and subsidies?


"Work by the International Food Policy Research Institute in Washington suggests that biofuel production accounts for a quarter to a third of the recent increase in global commodity prices."

Further, "many of the upheavals over food prices abroad have concerned rice and wheat, neither of which is used as a biofuel."


Like the housing bubble is there a part being played by the Wall Street speculators and paper pushes foisting yet another bubble onto the world, this time in commodities. I have to wonder.


http://iht.com/articles/2008/04/15/business/15f...

My home and current province, Saskatchewan, has always had the proper distinction of being the "breadbasket of the world." I demand an apology! I feel bitter! Where's my gun?

You are a bit unfair on McCain's "flip-flop." In the same speech he said that ethanol didn't make sense at $20 a barrel but "made sense at $80 a barrel," he also said it should still be done without mandates or subsidies. Plent of references to that at the time. He repeated that in several speeches in Iowa itself.

Yes, that means no ethanol subsidies. But it also means no rifle-shot tax breaks for big oil. It means no line items for hydrogen, no mandates for other renewable fuels, and no big-government debacles like the Dakotas Synfuels plant. It means ethanol entrepreneurs get a level playing field to make their case -- and earn their profits.

He said that in Ames, Iowa, in November 2007 before the caucus, before a conference on "growing the bioeconomy" (which I must assume is a euphemism for Iowans interested in corn ethanol.)

I don't think that there's anything unreasonable in saying, "Ethanol may make sense now with higher oil prices, but that should be demonstrated without subsidies." Personally I think that the evidence shows that ethanol still isn't worth it, but I'd be happy to let the market decide.

He then went down in the Iowa polls after criticizing ethanol subsidies at the conference, while insisting that he though that happy ethanol could become successful without subsidies if subsidies for oil and other fuels, "alternative" and not, were removed.

Further, “many of the upheavals over food prices abroad have concerned rice and wheat, neither of which is used as a biofuel.”

And both of which are substitutes for corn, which is used as a biofuel. An increase in demand for one leads to an increase in demand for the others, and so too prices.

I see your knowledge of rudimentary economics hasn't improved much since you quit commenting at Cafe Hayek, muirgeo.

"But six long years of drought have taken a toll, reducing Australia’s rice crop by 98 percent and leading to the mothballing of the mill last December."

http://www.nytimes.com/2008/04/17/business/worl...

You just got caught in the middle, Iowa, and I’ll always love you.

But not the way you love your parents, and not in a particularlist way because it's your home state, right Will? Only incidentally and faithlessly will you "always love" it, right? ;)

That's right John. I was waiting for this, but I was starting to think it would never come, so thank you.